Positive Outlook On NGX, Amid Influence Of Year-end Window Dressing

Market Update for November 29

Despite the volatility and selling pressure in November, the market is set to close the month positive, ushering in a buy and bullish December as players continue to reposition their portfolio in line with dividend expectations for the current year-end.  At Monday’s trading, the benchmark index short-lived the previous day’s positive outing, turning negative to extend its sideways movement on a low traded volume. Market breadth was also negative in the midst of weak investors’ vibes and recovery in oil price at the international market, regardless of the fear of COVID 19 resurgence in some climates.

The mixed sentiments and signals at the end of Monday’s trading indicate investors taking profit in some positions to re-enter others, especially dividend-paying stocks among the blue-chips that suffered losses recently.

Technically, the NGX All-Share index’s action remained strong in the face of profit-taking and portfolio repositioning, as the benchmark index slipped to continue its sideways trending within the rectangular channel. Momentum indicators for the day were mixed nonetheless, as the ADX dropped to 54.85, while Money Flow Index fell to 62.18 points on the daily chart. The continuation of this trend depends largely on the interplay of market forces and the inflow of funds into equity space.

Monday’s trading started slightly in the green, before pulling back to oscillate for the rest of the session on selloffs and ‘buy’ interests in some financial stocks, a situation that pushed the NGX index to an intraday low of 43,248.16 basis points from its highs of 43,319.46bps before closing slightly below the opening points at 43,270.94bps.

Meanwhile, market technicals were weak and mixed as volume traded was lower than the previous day’s in the midst of breadth that favoured the bears on a mixed sentiment as revealed by Investdata’s Sentiment Report showing 31% ‘buy’ volume and 69% sell position. The total transaction volume index stood at 0.66 points, just as momentum behind the day’s performance remained relatively strong. Money Flow Index read 62.18 points, from the previous day’s 62.85 points, indicating that funds exited the market on profit-taking.

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Index and Mkt Cap Movement

At the close of Monday’s trading, the key performance NGXASI was slightly down by 46.57 basis points, at 43,270.94bps after opening at 43,308.46bps, representing a 0.09% drop, just as market capitalization fell by N19.5bn, closing at N22.58tr, from the opening value of N22.60tr, also representing 0.09% value loss.

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The downturn was driven by selloffs in GTCO, Oando, and UBA, among others, which impacted mildly on Year-To-Date gain, reducing it to 7.41%. Market capitalization stood at N1.56tr YTD, representing a 7.22% growth from the year’s opening value.

Bearish Sector Indices

Sectoral performance indexes were bearish, except for the NGX Insurance that closed 0.82% higher, while the NGX Oil/Gas index led the decliners, losing 0.56%, followed by Consumer Goods and Banking with 0.23% and 0.18% respectively.

Market breadth was negative as losers outnumbered gainers in the ratio of 21:13, while activities in volume and value terms were down after investors exchanged 213.12m shares worth N2.36bn, compared to the previous day’s 305.31m units valued at N2.08bn. Volume was boosted by trades in FCMB, AIICO, Zenith Bank, GTCO, and Access Bank.

AIICO and Veritakapital were the best-performing stocks, gaining 8.75% and 4.5% respectively, closing at N0.76 and N0.21per share respectively on low price attraction after price adjusted for bonus and market forces. On the flip side, UPDC and UPDCREIT lost 9.96% and 9.90% respectively, closing at N1.18 and N4.55 per share, purely on selloffs.

Market Outlook

We expect the market to close positively, with seasonality and cycles likely to influence equity prices ahead of year-end window dressing. The low volume traded in the midst of pullbacks is creating new buy opportunities on the strength of the Q3 numbers. Also, candlestick formation and volume traded during the session revealed that institutional players are not selling but positioning in blue-chip companies, as the index slide on a light volume. It is equally noteworthy that during a ranging market many players seat on the fence waiting for a breakout or down before jumping into any position.  Even as many stocks are trading within their buy ranges, a situation expected to attract more funds into the stock market, given the Dividend Yield capable of serving as a hedge against inflation.

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6. Profitable Stock Picks Made Easy, Using Fundamental Tools, Mrs. Ebiere Helen Fumudoh, MD/CEO, Norrenberger Securities Ltd
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CRO|Investdata Consulting Ltd




Tel: 08028164085, 08179547605