Market Update for December 6

The positive outing on the Nigerian Exchange continued at the midweek as market players increased their buying interests across major sectors, especially banking stocks, fueled by dividend expectation. The sector remain the most consistent in rewarding investors amidst of impressive earnings and proposed recapitalization in the coming year.
The outcome of midweek’s Treasury Bills Primary Market Auction revealed an increase in rate or yields for the 91-day and 182-day tenor to 9% and 13% respectively, while the 364 days had a decline to 15.75% in the face of rising inflation rate. Also, all eyes are on Consumer Price Index report for November expected to hit the market next week.
The market consolidated on it previous session gains, as the benchmark NGX All-Share index closed higher on a very high traded volume and positive market breadth to signal a markup phase by the smart money, which needs to be confirm as the market opens on Thursday.
There is also positive momentum in the face of index breaking out its consolidation and ranging mood, which is a bullish sign, but there is this continued disconnection of the stock market from the economic reality of the country with headwinds continuing to remain a major concern for investors. This calls for cautious trading among the market players, amidst contracting economic activities as indicated by November Purchasing Managers index that decline to 48 points from 49.1 points in October, the mixed outlook for the month of December and Q1 2024, due to the current policy direction of the Central Bank of Nigeria (CBN). Also, the apex bank heating up the weak economic with its latest stress test reports of the nation banks, coupled with how the government hopes to implement the 2024 national budget and grow the country into a US$1tr economy over the next seven years remains unclear to the investing public and would require a road map.
However, we hope that managers of Nigeria’s economy will formulate the right policies to achieve the expectation, among others while ensuring fiscal responsibility and maintaining a frugal disposition- a wide departure from the current norm. Already, we note that there is a divergence in economic policies and expectations, and hope to see how the government and its economic managers will achieve the target under the current policy direction.
Also, we warn that the policy tightening disposition of the CBN at this time could result in an unintended economic contraction in an environment where growth is already weak and fragile, with high cost of funds further pushing cost of production and services higher, driving prices northward. This is made worse by imported inflation due to the lingering foreign exchange challenges, among others. The two consecutive quarters of rate hikes, as well as the proposed fresh round of bank recapitalization are expected to drive the much desired economic development in the face of a significant devaluation of the Naira, just as the surging inflation is bound to drive mixed outlook in the market and economy in the first half of 2024.
The buying sentiment in the midst of positive trade metrics supported the market, as momentum indicators signal increase strength, MACD convergent with index action indicates bullish divergence on above average traded volume pattern ahead of dividend season in Q1 2024, while all eyes are fixed on the Santa Claus rally, year-end window dressing and 2023 audited full-year earnings reporting season which kicks off in January. A glimpse into what we should expect at year end has been provided by the unaudited Q3 corporate earnings reports released by listed companies.
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Oil price oscillation continued, as it slides further to trade at $74.18 per barrel in the midst of US crude inventory build sending oil price lower to overshadow OPEC output cuts. Even as middle east conflict is taking another dimension. As rate hike pause by some of the central banks due to cooling inflation continue ahead of 2024. The influence of demand and supply oil are worsened by the geopolitical tensions rising across the globe at a time the Russia-Ukraine war gradually approaches its third year. The war remains a major cause for concern with much more at stake than previously thought. The supply tightening due to the Russia-Ukraine war will propel the up and down movement in oil price, which also drive market volatility across the globe.
Midweek trading started in the upside and was sustained throughout the session on positioning in banking stocks and other blue chip companies, even as some stocks were hit with profit taking. This situation pushed the Index to an intraday high of 71,866.37bps from its lows of 71,242.31bps, before closing above its opening level at 71,808.64bps.
Market technicals were positive and strong with a higher volume traded, when compared to the previous session, in the midst of breadth that favoured the bulls on a buying sentiment as revealed by Investdata’s Sentiments Report showing 91% buy position and 9% sell volume. The total transaction volume index stood at 1.49 points, just as the momentum behind the day’s performance was strong, with Money Flow Index looking up to read 75.66pts, from the previous day’s 74.89pts, indicating that funds entered the market.
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Index and Market Caps
The composite NGXASI, at the end of Wednesday trading gained 558.47bps, closing at 71,808.64bps, from the 71,250.17bps opening level, representing a 0.78% growth. Market capitalization rose by N305.61bn, closing at N39.29tr, from the previous day’s N38.99tr, which also represented a 0.78% appreciation in value.
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The upturn was driven by accumulation in the shares of FBNH, MTNN, GTCO, ETI, Zenith Bank, Accesscorp, UBA and Stanbic IBTC, among others. This impacted positively on Year-To-Date gain, as it inched up to cross 40.11%, while Market Capitalization YTD gain stood at N11.08tr, representing a 40.76% rise above its opening level for the year.

Bearish Sector Indices
Sectoral performance indexes were in red, save for he NGX Banking that closed higher by 5.01%, while the NGX Insurance led the decliners after losing 2%, followed by Consumer and Industrial goods with 0.11% and 0.02% respectively. As NGX Energy finished flat.
Market breadth was positive with gainers outnumbering losers in the ratio of 34:21, while transactions in volume and value terms were up, after players exchanged 690.01m shares worth N12.10bn, driven by trades in GTCO, UBA, Fidelity Bank, Accesscorp and Universal Insurance.
Thomas Wyatt and FBNH were the best performing stocks, gaining 9.93% and 9.91%, closing at N3.32per and N29.40 share respectively, on market sentiment and forces. On the flip side, Mansard and Guinea Insurance lost 9.69% and 9.68%, closing at N4.10 and N0.28 per share, purely on the back of profits .

Market Outlook
We expect the mixed performance to continue on bargain hunting for dividend paying stocks ahead of year end in the midst of sector rotation and portfolio rebalancing on the strength of the better-than-expected corporate numbers released and high yields. However, we note that 2024 is beginning dividend season ahead.
Meanwhile, all eyes are on the fiscal and monetary authorities to give direction of the government reforms and policies so far.

APPRECIATION
The management of Investdata Consulting uses this medium to appreciate all who participated in the Invest 2024 Summit, including our esteemed facilitators who were on hand to share their valued experiences garnered over the years.
While we appreciate those who joined us for the first time as we seek to create and grow wealth for discerning investors, we are grateful to all who have stood by us over the years and keep returning. May God bless you all, even as we pray that you continue to find value in this relationship that we cannot take for granted

Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
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ambroseconsultants@yahoo.com
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