Market Update for January 20
Trading on the Nigerian Exchange started the new week on a marginally positive note, with the benchmark NGX All-Share index inching up amid improved buying interests in some major sectors of the market. This extended the seeming uptrend for a third consecutive session as the bourse continued its accumulation phase amid positive market internals while investors and traders position ahead of the Q4 earnings inflow any moment from now. Meanwhile, bargain hunters took advantage of the pullbacks to position in medium and large cap stocks at the beginning of the week, waiting for the unaudited full year accounts of companies with December year-end on the NGX.
The rebounding market continued due to players repositioning their portfolios in the midst of prevailing low valuation and January trading patterns, just as volatility continued in the face of mixed macroeconomic data and expected economic events. The Central Bank of Nigeria (CBN) has shifted its first policy meeting for year 2025 to February 17 and 18. Following the delayed meeting and announcement therefrom, the state of expected corporate earnings should give direction for dividend investors and other players, especially for companies with December year-end.
The recent waves on the NGX are just portfolio rebalancing-driven, as well as profit taking in preparation for corporate earnings inflow and dividend expectation in Q1 which is the peak of the earnings reporting season due to kick-off any moment from now, as mentioned earlier.
Also, dividend yield remains very important to players. The NGX All-Share index has so far revealed a bullish pattern that supports uptrend, as market players position in 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.
Also, new year positioning is ongoing on the back of cross deals and others in the market. During the session, for example, more companies notified the exchange of their closed period and board meetings. They include McNichols, Omatek and Honeywell, while Airtel Africa also continued to update the market of its share buyback. Just as ABC Transport and Omatek informed the exchange of its insider dealings.
Technically, money flow and other momentum tools were somewhat mixed, 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 is trending up to signal buy opportunities, thereby creating the perfect setup for high probability of continuation to catch new year repositioning at the right price. Also, as the index still trades below the T-line and above the two moving averages of 50-EMA and 50-SMA, this indicates somehow return of strength in the midst of changing market fundamentals and technicals on the NGX and the economy.
Also noteworthy is the fact that the NGX is currently in its accumulation phase in the midst of increasing traded volume, as candlestick formation and momentum indicators reveal somewhat return of strength in the market. As ADX is looking down to read 43.93 points, while RSI and Money Flow Index were mixed at 52.94 and 63.06 points against the previous session’s 52.83 and 64.32 points respectively. Consequently, market players should watch this current trend and trade wisely in the face of funds leaving the market on a buying sentiment in some sectors and profit 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 slowdown to continue its oscillation, trading at $80.02 per barrel in the midst of Trump inauguration and sanction on Russia. Even as US planned to increase its crude inventories ahead of policy uncertainty of Trump administration. OPEC project robust demand for oil 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 rising geopolitical uncertainties across many economies remains a threat 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.
Meanwhile, Monday’s trading opened on the downside before rebounding in the afternoon and was sustained for the rest of the session on buying interest in high cap stocks and others, despite profit taking. This situation pushed the NGX’s index to an intra-day high of 102,376.00bps from its lows of 102,145,20bps, before closing slightly above its opening level at 102,370.40bps.
Market technicals were positive and strong with higher volume when compared to the previous session in the midst of breadth favoring the bulls on a buying sentiment as revealed by Investdata’s Sentiments Report showing 98% buy position and 2% sell volume. The total transaction volume index stood at 0.62 points, just as energy behind the day’s performance was strong as Money Flow Index looks down to read 63.06pts, from the previous day’s 64.32pts, indicating that funds left the market, despite closing in the green.
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Index and Market Caps
The composite NGXASI, at the end of Monday trading inched up 16.94 basis points, closing at 102,370.62bps from 102,353,68bps, representing a 0.02% up, while market capitalization rose by N10.14bn, at N62.86tr from the previous day’s N62.85tr, representing a 0.02% value gain.
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The upturn was driven by position taking in the shares of Oando, Transcorp, Nascon, Wapco, Livestock and SOCA, among others. This impacted mildly Year-To-Date gain as it turned negative 0.54%, while Market capitalization lost stood at N1.41tr, representing 0.54% decline over its opening level for the year.
Mixed Sector Indices
Sectoral performance indexes were mixed as the NGX Consumer Good and Energy indexes closed 0.46% and 0.11% lower respectively, while the NGX Insurance led the advancers after gaining 2.12% followed by Industrial goods and Banking with 0.17% and 0.12% respectively.
Market breadth was positive, as gainer outnumbered losers in the ratio of 31:26, while activities in volume and value were up after investors exchanged 1.30 billion shares worth N17.70bn. Volume was driven by trades in Universal Insurance, Aiico, Oando, Zenith Bank and Fidelity Bank.
Caverton and Wapic were the best performing stocks, gaining 10% and 9.91% respectively, closing at N2.42 and N2.44 per share respectively on the back of sentiment and market forces respectively. On the flip side, Eunisell and JohnHolt lost 9.99% and 9.68% respectively, closing at N14.06 and N9.20per share, purely on selloffs and profit taking.
Market Outlook
We expect mixed sentiments to continue amid profit taking, as bargain hunters take advantage of pullbacks to position, while rebalancing their portfolios midst high inflation and low valuation ahead of Q4 earnings reports. 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