NGX Bull-run May Slowdown As Investors Position Ahead Of 2023 Earnings, Dec CPI, MPC Outcome

Market Update for January   9

The bull ascendancy on the Nigerian Exchange continued on Tuesday on a higher magnitude, as highly priced stocks appreciated, hitting new highs that impacted heavily on the benchmark NGX All-Share index which closed further north on a very high traded volume and positive market breadth. This extended the bull transition for the eighth successive session, reflecting the increased buying interest and sentiments in the face of profit taking in some stocks, as well as the ongoing portfolio repositioning.

In the midst of galloping market and volatility, the NGX index’s action broke out various psychological lines of 81,000, 82,000 and 83,000 basis points in a single trading session, revealing the high buying interest and inflow of funds into the market, despite the seeming profit booking in the shares of Transcorp Plc, Mansard, and Total, among others. The market extended the markup phase, just as all eyes are still on the December inflation figure and expected full-year corporate earnings of quoted companies, ahead of this month’s policy meeting of the Central Bank of Nigeria (CBN).

The market gyration has not changed the mixed outlook of 2024, with the fiscal and monetary authorities yet to give a clear direction of where the economy is heading, coupled with what is happening at the global economic arena, especially geopolitical tensions, and fear of a recession, among others that will continue to influence investment decisions, while driving volatility.

The bargain hunting and portfolio rebalancing on the exchange continued as earnings and the dividend season draws closer with unaudited Q4 results hitting the market any moment from now. Also, more companies like Cadbury, International Breweries, McNichols, Unilever, Veritas Kapital Assurance and others notified the NGX and investors of their board meetings and closed period for the 2023 full-year financials, in the midst of January effects and other factors associated with the increasing economic headwinds.

The NGX index’s action remains above the T-line as the market makes another higher highs on increased momentum and buying sentiment to trade above all the Moving Averages on the daily, weekly and monthly time frame in the midst of volatile and earnings expectations.

The candlestick formation at the end of the session is revealing a continuation of trend that needs confirmation as trading opens today. Therefore, market players should target companies with consistent track records of dividend payment, strong fundamentals and growth prospects that will support further growth in earnings which price feeds on in any market cycle. Technically, the index’s action has extended its markup phase in the face of a topping chart and bullish V-shape pattern, as fixed income market rates/yields outlook remain mixed ahead of today’s TB primary market auction being the first in the new year.

The forces and strength behind the market trend as revealed by momentum indicators, looks stronger but at overbought region, as the ADX read 61.53, just as, RSI and Money Flow Index are reading 93.73 and 92.49 points against the previous session 91.36 and 91.40 points respectively. This should be a concern for discerning investors, as smart traders cash out capital gain any moment from now. The trading volume pattern suggests the entrance of new investors and full return of many players who had gone on holidays and institutional investors accumulating more positions as others investment windows returns remain below inflation and negative.  Also, the anticipated financial market and economic reset in 2024, comes with huge opportunities to create wealth for smart investors and traders.

To navigate the rest of the quarter profitably using fundamental and technical analysis to run, 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 price oscillation continued, as it rebound to trade at $78.00 per barrel in the midst of disruption in Libyan supply and unexpected decrees in US crude supplies in the face of rising tensions as middle east conflicts escalating and red sea security cncern, while the war in Ukraine and Russia has escalated to influence the global economic outlook. The geopolitical tension across the globe is a major threat to many economies. Also, oil supply increase by OPEC and others impact oil price as it continued trade below $80. This trend may likely continue in 2024, this up and down movement of oil price also continues to drive volatility.

Meanwhile, Tuesday’s trading started sharply on the upside and was sustained throughout the session, on increased buying interests in large cap stocks, blue chip companies and others, despite profit taking in some stocks, a situation that pushed the NGX’s index to an intraday high of 83,240.25 basis points from its lows of 80,302.25bps before closing significantly above its opening level at 83,191.84 bps.

Market technicals were positive and strong, with higher volume of trade compared to the previous session in the midst of positive breadth and buying sentiment as revealed by Investdata’s Sentiments Report showing 98% buy position and 2% sell volume. The total transaction volume index stood at 2.49 points, just as impetus behind the day’s performance was strong as Money Flow Index looking up at 92.49pts, from the previous day’s 91.40pts, indicating that funds entered the market.

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Index and Market Caps

At the end of Tuesday’s trading, the composite NGXASI gained 2,863.26bps, closing at 83,191.84bps after opening at 80,324.53bps, representing a 3.57% growth, just as market capitalization rose by N1.59 trillion bn closing at N45.52tr from the previous day’s N43.96tr, which also represented a 3.57% appreciation in value.

Attention: If you have not signed up for INVESTDATA’s buy and sell signal setup, don’t delay, because the number of stocks entering their overbought range has just increased to 54 as they rallied to new highs that call for caution and positive chart patterns to be on our watchlist. These stocks have potentials to retrace, considering their earnings prospects and the oscillating moves in an upmarket and weak economy.

To become a member, send ‘YES’ or ‘STOCKS’ to the phone numbers below. Take advantage of this service to buy right and sell right at the current oscillating market in the midst of earnings season, portfolio reshuffling, and repositioning as we await an economic reform policy that can stimulate and re-track the economy to the path of growth and development.

Tuesday’s upturn was driven by demand for the shares of MTNN, Dangote Cement, BUA Foods, Wapco, Conoil, Transcorp, ETI, Unilever, GTCO, Zenith Bank, UBA, SterlingNG Accescorp, Mansard, Ucap, Dangote Sugar, Wema Bank, FBNH, Cadbury and Aiico, among others, which impacted positively on Year-To-Date gain of 11.43%. Market capitalization YTD gain stood at N4.80 trillion, representing 11.43% above its opening level for the year.

Bullish Sector Indices

All sectorial performance indexes for the session were in green except for the NGX Oil/Gas that closed lower by 2.35%, while NGX Banking index led the advancers after gaining 8.16%, followed by Insurance, Consumer and Industrial goods with 6.37%, 3.98% and 2.53% respectively.

Market breadth was positive as gainers outnumbered losers in the ratio of 72:13; whereas activities in volume and value were up, after players exchanged 1.41 billion shares worth N24.68bn. Volume was driven by trades in Fidelity Bank, FCMB, UBA, Transcorp and Accesscorp.

FBNH and Cadbury were the best performing stocks, gaining 10% each, closing at N28.60 and N18.15per share respectively on market forces and expectation of earnings.  On the flip side, Total Energies and Daarcomm lost 10% and 9.40% respectively, closing at N346.50 and N1.06per share, purely on profit taking and selloffs.

Market Outlook

We expect positive sentiment and  bull-run, slowing down on profit taking, as NGX crosses 83,000 psychological line on positioning by bargain hunters ahead of unaudited Q4 2023 numbers and volatility in the face of  expected December CPI and coming MPC meeting, as pullback at this point will add more strength to upside potential. As such, 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

Tel: 08028164085, 08179547605