Market Update for November 27
Bearish momentum on the Nigerian Exchange continued at the midweek, strong enough to wipe away the previous marginal gains, as market players obviously reposition their portfolios in reaction to recent rate hike by the Central Bank of Nigeria amid year-end seasonality. This is also ahead of sector rotation for Q4 numbers and the dividend income season in first quarter of 2025.
The benchmark NGX All-Share index broke down the strong support levels of 97,378.62 basis points and 97,419.92bps on a very high traded volume, negative market breadth and selling sentiments, as profit taking and selloffs hit Aradel Holdings and other mid cap stocks, a situation that weighed on the market.
These pullbacks at the current state and time of the market creates buying opportunities for discerning players. Note sectors which supported the recent Q3 GDP and the industries will be the net beneficiaries of this rate hike and should be the target of investors and traders ahead of the Santa Claus rally in December. These, as well as the January effects that had turned a positive patterns and trends are what the market should look forward to by taking action and positioning in the right stocks at the right prices. The nation’s economic managers continue to trade the economy for foreign inflow with high interest rate that is driving low productivity and failed to checkmate inflation of today.
As the bullish hammer chart pattern formation failed at the end of midweek trading, players looking to a reversal of the current trend, as November is winding down to usher in the last month of the year 2024. During the session, Accesscorp announced its completion of Standard Chartered subsidiaries acquisition, while Airtel Africa, Aradel Holdings and Ucap informed the market of insiders dealing. Money flow and other momentum tools continued to look down to present buy opportunities for bargain hunters who understand the importance of buying low and selling high in any market condition in the midst ongoing volatility.
There is also selling sentiment in the midst of expected retracement from support level of 97,123.61 basis points and 97,233.07ps to rebound, thereby creating the perfect setup for high probability of reversal or continuation to catch end of year repositioning at the right price. Also, as the index is still trading below the T-line and the two moving averages of 50-EMA and 50-SMA, this indicate weakness in the midst of changing market fundamentals and technicals on the NGX and the economy.
Technically, the NGX is on a decline phase in the midst of recovery and selling sentiment, as candlestick formation and momentum indicators reveal a somewhat weakness in the market. ADX looking up to read 29.01 points, while RSI and Money Flow Index were down at 43.82 and 35.27 points against the previous session’s 48.35 and 36.48 points respectively. Consequently, market players should watch this current trend and trade wisely in the face of funds leaving the market on a selling sentiment in some sectors and position taking in others. Also, trading volume pattern continued to oscillates, suggesting buying interest and selloffs in the market amid players revaluing the market and policy direction of the government that look confused.
To navigate the rest of this year and beyond profitably, running with economic events, fundamental and technical analysis, join investdata live sessions at noon every Monday, Wednesday and Friday trading day “and also get investdata technical toolbox to play the current state of the market do suggest that discerning investors are gradually becoming greedy, while others are fearful, as seen in the recent range market. Despite the oscillating volume of transaction witnessed in recent time, it is time to go shopping for undervalued stocks, sectors and the next insider playing opportunity.
Oil prices at midweek were steady to continue its oscillation, trading at $72.96 per barrel in the midst of Israel-Hezbollah ceasefire effect ahead of OPEC upcoming meeting on production policy in the face of ongoing geopolitical tensions in the Middle East and Russia war with Ukraine. As US President-elect tariff threats its trade’s partners and global economy outlook. The rising geopolitical uncertainties across many economies remains a threat to the global economy and energy consumption. This trend may likely continue for the rest of 2024, 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.
Midweek trading opened in the downside and it was sustained throughout the session, despite oscillating on selloffs in some large cap stocks and buying interest in other companies. This situation pushed the NGX’s index to an intra-day low of 97,267.76bps from its highs of 97,642.49bps, before closing below its opening level at 97,296.57bps.
Market technicals were weak and mixed with higher volume when compared to the previous session in the midst of breadth favoring the bears on a selling sentiment as revealed by Investdata’s Sentiments Report showing 8% buy position and 92% sell volume. The total transaction volume index stood at 1.21 points, just as energy behind the day’s performance was weak as Money Flow Index inched down to read 35.27pts, from the previous day’s 36.48pts, indicating that funds left the market.
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Index and Market Caps
At the end of the day trading, NGX All-Share Index shed 343.31 basis points, closing at 97,296.57bps from 97,639.88bps, representing a 0.35% decline, while market capitalization fell by N208.bn, at N58.97tr from the previous day’s N59.18tr, representing a 0.35% depreciation in value.
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The downturn was driven by selloffs and profit booking in the shares of Aradel Holdings,Eterna, NB, Fidelity Bank, Africa Prudential , CWG, UPDC, JohnHolt and HMCALL, among others. This impacted negatively on Year-To-Date gain as it inched down to 30.12%, while Market capitalization gain stood at N14.89tr, representing 44.17% growth over its opening level for the year.
Bullish Sector Indices
Sectoral performance indexes were up, except for the NGX Consumer goods index that closed 0.34% lower, while NGX Insurance index led the advancers after gaining 1.24% followed by Energy, Banking and Industrial goods with 1.02%, 0.14% and 0.02% respectively.
Market breadth was negative, as losers outnumbered gainers in the ratio of 25:23, while transactions in volume and value were up after investors exchanged 822.46m shares worth N10.29bn. Volume was driven by trades in HMCALL, Japaul Gold, Tantalizer, UBA and GTCO.
Sunu Assurance and Guinea Insurance were the best performing stocks, gaining 9.97% and 8.16% respectively, closing at N4.19 and N0.53 per share respectively on the back of sentiment and market forces respectively. On the flip side, John Holt and Aradel Holdings lost 10% and 9.98% respectively, closing at N9.90 and N473.30per share, purely on profit taking.
Market Outlook
We expect mixed sentiments to continue as players digest impacts of the latest rate hike, while rebalancing their portfolios midst of profit taking, bargain hunting, low valuation and position taking by smart money for year-end. Also, sector rotation and portfolio rebalancing continued in the market with investors taking advantage of pullbacks and 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.
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- How To Navigate The Alternative Markets To Grow Your Portfolio in 2025, by AlhajiGarba Kurfi, MD/CEO APT Securities & Funds Ltd
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- The Place Of Corporate Earnings In Trading & Investing For Retirement, by Mr Kebira Jimoh Aruna, MD/CEO GlobalView Capital Ltd
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Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
08028164085
