Positive Sentiment Ahead On Positioning, Bargain Hunting

Market Update for the Week Ended December 24

and Outlook for Dec 29-31

Nigeria’s equity market indexes and stock prices continued to oscillates in the last full trading week of December and year 2021, as investors assessed available economic data and continued spread of the omicron variant of the COVID-19 virus, ahead of year-end. We note that Santa Claus week failed to influence prices of equity, thereby making the historical trends and patterns for the period a mirage with mixed performance and trend, closing lower, while weakening the previous week’s momentum.

 Over the past seven sessions market performance has been flat with the healthcare sector recording a 2% gain for the same period, thereby outperforming the general market on positive sentiments for pharmaceutical stocks. It came ahead of the insurance, Consumer Goods, Industrial Goods and banking sectors that closed positive on improved buying interests. 

The year-end window dressing has just gotten underway as trading activities reopen after the public holidays Wednesday, and should last through January, in line with the monthly effect that has stayed positive in the past five years, closing higher on inflow of unaudited Q4 and full-year earnings reports expected to hit the market, thereby giving investors and traders insights into what they should expect from these companies in terms of dividend, after seeing their earnings power and numbers.

Ahead of this, companies have started notifying the exchange and investing public of their closed period and dates for their board meeting, where the directors would approve the Q4 unaudited accounts and audited 2021 financials.  Trading metrics for last week revealed a mixed performance and sentiments on a low traded volume, with increased demand for low and medium cap stocks, as low price attractions and other news like acquisition impacted Mutual Benefits Assurance, Consolidated Hallmark Insurance, UBN, May & Baker, Meyer, Cutix and UPDC.

These made them toasts of market players for the period, just as investors also target consistent dividend paying stocks in the market, especially now that the year 2021 is winding down. Already, Q3 numbers have revealed the undervalued state of many stocks that supports upside potential and payout. During the week also, the news of the resignation of Remi Babalola, chairman, FBN Holding, who was replaced by another Central Bank of Nigeria, in a bid to ensure there is no vaccum, and acquisition of 104 year-old Union Bank of Nigeria, by two-year old Titan Trust Bank.

This news impacted negatively on FBNH as there were selloffs and profit taking in the holding company, while the takeover news of UBN influenced the share price positively, recording strong buying sentiments to close above 20% for the week. 

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Also, to up your game in stock trading and investing, understanding the key to trading price and index action will go a long way to make the difference in your trading results, checkout the video materials belowMovement Of NGXASIThe key performance NGXASI had a mixed performance with two-day up market and three sessions of down market, after opening on a positive note of 0.12% up, in extension of the previous bull transition,  but witnessed a slowdown on Tuesday after losing 0.01%.

This trend was sustained at midweek and Thursday with the index declining by 0.64% and 0.03% respectively,  before rebounding marginally on Friday with a gain of 0.08%, bringing it to total loss of 0.21% for the week against the previous week  gain of  1.12%. Overall, the Month-to-Date and Year-to-Date returns printed at -2.28% and +4.95%, respectively.In all, the composite index shed 90.46 basis points, closing the period at 42,262.85bps, after touching an intra-week low of 42,207.99bps from its highs of 42,464.09bps, after the week opened at 42,353.317bps on a selling sentiment and buying interest in dividend paying stocks.

Market capitalization fell by N47bn, closing at N22,060tr, compared to the previous week’s N22.107tr, which also represented a 0.21% depreciation in value. Top advancers table for the week was dominated by low priced stocks which had become the toast of investors, alongside the dividend paying stocks. 

This was in the midst of continued portfolio repositioning on the strength of Q3 earnings reports and positive economic data. It is noteworthy that the NGX Index and price actions revealed the presence of buyers in the market, a situation that reflected on major sectoral indexes. Market breadth was positive for the week, besides the low traded volume and the expected year-end seasonality’s and historical trend patterns that are likely to support the recovery in the short to long-run, as investors increase their positions on a ranging movement.

Advancers outnumbered decliners in the ratio of 33:25, on selling sentiment as revealed by investors’ sentiment report showing a 21% buy volume and 79% sell position. Money Flow Index rose to 70.99bps from the previous week’s 67.25 points, an indication that funds entered the market. NSEASI WEEKLY CHART MOVEMENT  NGX index’s action, on a weekly chart maintained a bullish pattern despite sideway trend and bearish candlestick on a low traded volume in the midst of selling  sentiment and reversal moves as revealed by the candlestick at the end of the week’s trading on a strong resistance level.

The candlestick pattern indicates a bearish outing and that the market is correcting. Also with all eyes on fixed income market yields and oil prices to further support market fundamentals and attract liquidity to the equity space. The NGX at this point is creating new buying opportunities.

 Bullish Sectoral IndicesPerformance indexes across the sectors were in green, except for NGX Energy that closed lower by 0.52%, while the NGX Insurance led the advancers after gaining 1.853%, followed by Consumer, Industrial Goods and Banking with 0.78%, 0.435 and 0.10% respectively. Transactions in volume and value terms dropped, as investor traded 965.06 million shares worth N12.46bn, compared to previous week’s 1.32bn units valued at N15.33bn.

Volume was driven by Financial Services, Conglomerates and Consumer goods, particularly UACN, FBN Holdings, Sovereign Trust Insurance, Access Bank and Transcorp.Mutual Benefits Assurance and Consolidated Hallmark Insurance were the best performing stocks for the week after gaining 23.08% and 20.69% respectively, closing at N0.32 and N0.70 per share respectively on market forces and earnings expectation. On the flip side, Julius Berger and MRS Oil lost 9.88% and 9.85% respectively, at N22.35 and N12.35per share, purely selloffs.Outlook for the weekWe expect a positive sentiment, on last minutes positioning by investors and bargain hunters, ahead of seasonality and historical trends of year end window dressing. It is also noteworthy that funds and portfolio managers continue to take position on the strength of Q3 numbers ahead of 2021 financials. For now, many stocks remain within their buy ranges to attract funds into the equity space. Also, investors will continue tracking yields movement in the fixed income market. Last week low volume suggests that institutional investors are not selling. It is noteworthy that oil price has continued to oscillates in the international market to trade above $70; corporate actions, as well as the Q4 unaudited numbers are around the corner.2022 Q1 Masterclass: Actionable Trading Plan & Opportunities Where are you in your journey to Financial Independence? Les asgg.fr/ mamans et les futures mamans trouveront aussi de quoi satisfaire tous leurs besoins avec des produits de qualité, pour elles et leur bébé.   Your 2022 Q1 trading action plan starts here-Let these best professionals and expert traders and top CEOs of Stockbroking Firms show you how to map out a plan of action for the first quarter of 2022 and ‘buy’ opportunities ahead of the peak earnings season in the history of the Nigerian equity market. Inside this action plan, you will discover:

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