Market Update for February 3
The seesaw movement on the Nigerian Exchange continued Monday, with the first trading session of the new month starting on positive note as market players digest the latest corporate earnings to reposition their portfolios. Sector rotation also continues to persist on the strength of performance posted by companies across different sectors and industries ahead of dividend announcement that comes with the audited financial report of companies that are yet to release their earnings reports for the year ended December 31, 2024.
Notwithstanding the mixed session witnessed during the trading period, investors and traders reacted to some company earnings reports that are outstanding in expectation of their audited accounts.
Already, quoted companies have started notifying the exchange of their board meetings where the audited financial reports for the year ended December 31, 2024 will be approved. For example, on Monday, NGX Group, Lafarge Africa, FCMB and Omatek informed the investing public of their directors meeting and closed period, while Airtel updated the market of total voting right and capital announcement. Africa Prudential notified the NGX of new board appointments.
The recent corporate numbers have offered insights into what dividends some of the companies that have so far submitted their unaudited financial report for the 2024 full-year will look like on the strength of their earnings power and based on their dividend policy.
Volatility is expected to continue on the NGX as the earnings season progresses, just as the mixed macroeconomic data and expected economic events would shape market sentiments for companies with December year-end.
It is noteworthy that the Purchasing Managers’ Index (PMI) for January showed moderate growth in business activities at 52 points, as against 52.7 points in December 2024.
The ongoing waves in the NGX are portfolio rebalancing-driven, in addition to profit taking in preparation for more scorecards inflow and dividend expectation in Q1 which is the peak of the earnings reporting season on the NGX. Also, dividend yields remain very important to players at a time like this.
The NGX’s All-Share index retraced up, forming a reversal chart pattern that supports continuation of trend or pullback, because one day does not change a trend and it does not change outlook especially with reactions to earnings as market players digesting these numbers. Investors and traders should look the way of high yield dividend paying companies and growth stocks with higher upside potentials as a number of companies are hitting new 52-week highs. This is due to positive sentiments for some sectors, consolidation moves in some industries and expectations of positive corporate numbers from some others, based on their quarterly performance and history of dividend payouts.
Technically, money flow and other momentum tools were up, presenting buy opportunities for traders who understand the importance of buying low and selling high in any market condition in the midst ongoing volatility and buying sentiment. As the index inched up to signal buy opportunities, thereby creating the perfect setup for high probability of continuation to catch dividend season repositioning at the right price. Also, as the index trades above the T-line and the two moving averages of 50-EMA and 50-SMA, this indicates some strength in the midst of changing market fundamentals and technicals on the NGX and the economy.
Also the NGX is currently in its wait and see phase in the midst of increasing traded volume, as candlestick formation and momentum indicators reveal something about the market. ADX is looking down to read 29.71 points, while RSI and Money Flow Index were up at 63.07 and 56.39 points against the previous session’s 62.32 and 49.19 points respectively. Consequently, market players should watch this current trend and trade wisely in the face of funds entered the market on a buying sentiment in some sectors and position taking in others on a daily time frame. Also, trading volume pattern continued to oscillates, suggesting wait and see in the market amid players revaluing the market and economic events in the face of policy direction of the government that look inconsistent.
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Oil prices on Monday inched down to continue its oscillation, trading at $75.06 per barrel in the midst of increased US crude production, tariffs policy of Trump and easing geopolitical tensions. Even as all eyes are on OPEC meeting and its outcome to give direction in the volatile oil market in 2025 and 2026 in the face of ceasefire deal in the Middle East, while Russia and Ukraine war continue. As all eyes are on new tariff regime of Trump presidency. The geopolitical uncertainties across many economies remains a concern to the global economy and energy consumption in 2025. This trend may likely continue, while the up and down movement continues to drive volatility, even as the raging war between Ukraine and Russia continues to influence global oil supply and demand.
Monday’s trading opened slightly in the upside and was sustained for the rest of the session on position taking in high cap stocks and others, despite profit booking in some. This situation pushed the NGX’s index to an intra-day high of 104,707.49bps from its lows of 104,463.50bps, before closing above its opening level at 104,630.29bps.
Market technicals were weak and mixed with lower volume when compared to the previous session in the midst of breadth favoring the bears on a buying sentiment as revealed by Investdata’s Sentiments Report showing 68% buy position and 32% sell volume. The total transaction volume index stood at 0.93 points, just as momentum behind the day’s performance was relatively strong as Money Flow Index inched up to read 56.39pts, from the previous day’s 49.19pts, indicating that funds entered the market.
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Index and Market Caps
The composite NGX All-Share Index gained 134.18 basis points, closing at 104,630.30bps from 104,496.12bps, representing a 0.13% up, while market capitalization rose by N83bn, at N64.80r from the previous day’s N64.71tr, representing a 0.13% value gain.
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Meanwhile, Monday’s upturn was driven by positioning in the shares of MTN Nigeria, Presco, Okomu Oil, Oando and Consolidated Hallmark, among others. This impacted mildly on Year-To-Date gain that inched up to 1.66%, while Market capitalization gain stood at N2.38tr, representing 2.92% increase over its opening level for the year.
Mixed Sector Indices
Sectoral performance indexes were mixed, as NGX Insurance and Energy indexes closed higher by 0.54% and 0.02% respectively, while NGX Consumer goods led the decliners after losing 0.61%% followed by Banking and Industrial goods with 0.40% and 0.10% respectively.
Market breadth was negative, as losers outnumbered gainers in the ratio of 35:21, while activities in volume and value were down after investors exchanged 510.6 million shares worth N13.3bn. Volume was driven by trades in FBNH, Zenith Bank, Universal Insurance,UBA and Fidelity Bank.
Presco and Betaglass were the best performing stocks, gaining 10% each, closing at N643.50 and N78.65 per share respectively on the back of sentiment and impressive earnings reports respectively. On the flip side, University Press and Omatek lost 10% and 9.88% respectively, closing at N5.04 and N0.73per share, purely on profit taking.
Market Outlook
We expect mixed sentiments to continue as players digest corporate numbers with dividend expectations ahead audited earnings reports, while rebalancing their portfolios midst high inflation and earnings expectations. Also, sector rotation and portfolio rebalancing continued in the market with investors taking advantage of price correction to buy into value.
This is amid the volatility and pullbacks that add more strength to upside potential. Consequently, investors should take advantage of price correction. Also looking at the trends and events across the globe and domestically.
Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
08028164085
