Market Update for December 19

The bullish momentum and recovery on the Nigerian Exchange increased on buying interests across the major sectors of the market, especially with the positive sentiments for consumers goods giants like Honeywell Flour Mills, Nigeria Breweries, Nestle and others. We note also that insurance stocks have recently become the toast of market players ahead of their full year unaudited accounts and opportunities that come with their proposed recapitalization exercises. Is this the Santa Claus rally we have been waiting for, as the NGX’s market cap hits a new all-time-high of N61tr, while the benchmark NGX All-Share index year to date gain of 35.41% beat the country’s runaway inflation?

For smart traders, it is time to “plan your trade and trade your plan,” as the NGX rally yesterday changed the game. At the moment, it is time to know when to take profit and increase your position where you see potential opportunities lurking.

The uptrend on the NGX continued for the eighth consecutive session on a low traded volume and positive market internals, with money flow supporting the ongoing Santa Claus rally that is associated with year-end seasonality and sentiment. The index’s action broke out the 101,000 basis points psychological line in the midst of buying sentiment and markup phase to reflect funds entering the equity space, even as sector rotation and portfolio rebalancing continued ahead of 2025. Despite the relatively low transactions volume, smart money is already in the market and some stocks. This created buying opportunities for discerning players ahead of the usual January effects that had turned a positive pattern and trends on the NGX in recent years to guide positioning in the right stocks at the right prices.

The NGX’s index revealed an uptrend with strong money flow that supports bullish trend, as players are taking last minute position ahead of Xmas day, with increasing number of companies hitting a new 52-week high. Just as end of the year positioning continued on the back of cross deals and others in the market. During the session, MTNN and Fidelity Bank notified the NGX of their closed period for 2024 financial year, while Aradel Holdings informed the market of ministerial consent for the acquisition of SPDC limited. Just as Seplat Energies and Cutix notified the market of insiders dealings.

Money flow index  and other momentum tools were up, presenting buy opportunities for traders who understand the importance of buying low and selling high in any market condition in the midst ongoing volatility and buying sentiment. As index is set to breakout 101,586.40bps level to sustain uptrend, thereby creating the perfect setup for high probability of continuation to catch end of year repositioning at the right price. Also, as the index trades above the T-line and the two moving averages of 50-EMA and 50-SMA, this indicates strength in the midst of changing market fundamentals and technicals on the NGX and the economy.

Technically, the NGX is on a markup phase in the midst of recovery and buying momentum, as candlestick formation and momentum indicators reveal strength in the market. As ADX is looking up to read 28.05 points, while RSI and Money Flow Index were up at 80.58 and 94.49 points against the previous session’s 76.67 and 88.16 points respectively. Consequently, market players should watch this current trend and trade wisely in the face of funds entering the market on a buying sentiment in some sectors and position taking in others on a daily time frame. Also, trading volume pattern continued to oscillates, suggesting buying interest and selloffs in the market amid players revaluing the market and economic events in the face of policy direction of the government that look inconsistent.

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 on Thursday pulled back slightly to continue its oscillation, trading at $72.45 per barrel in the midst of market shocked and US fed rate cut. Even as OPEC in dilemma of production hike 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.

Thursday’s trading started in the green and was sustained for the rest of the session, signaling that the game has changed for now, amid increased position taking across the major sectors of the market. This situation pushed the NGX’s index to an intra-day high of 101,290.60bps from its lows of 100,482.70bps, before closing sharply above its opening level at 101,248.04bps.

Market technicals were positive and strong with higher volume when compared to the previous session in the midst of breadth favoring the bulls on a buying sentiment as revealed by Investdata’s Sentiments Report showing 95% buy position and 5% sell volume. The total transaction volume index stood at 0.80 points, just as momentum behind the day’s performance was  strong as Money Flow Index inched up to read 94.49pts, from the previous day’s 88.16pts, indicating that funds entered  the market.

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Index and Market Caps

At the end of Thursday trading, the key performance index NGXASI gained 770.56 basis points, closing at 101,248.02bps from 100,477.46bps, representing a 0.77% growth, while market capitalization rose by N467bn, at N61.25tr from the previous day’s N60.91tr, representing a 0.77% value gain.

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 oversold range has increased as market correction and volatility call for intelligent trading 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 market rally in the midst of seasonality, earnings expectations, portfolio reshuffling, and repositioning as we await  full year 2024 earnings season and the impact of ongoing  economic reforms of the government  to stimulate and re-track the economy to the path of growth and development.

The upturn was driven by buying interests in Aradel, MRS Oil, Nahco, GTCO, Zenith Bank, Nestle, FBNH, Honeywell, NB and Wapic, among others. This impacted positively on Year-To-Date gain as it inched up to 35.41%, while Market capitalization gain stood at N18.54tr, representing 50% growth over its opening level for the year.

Bullish Sector Indices

Sectoral performance indexes were up, save for the NGX Industrial Goods which closed 0.63% lower, while the NGX Insurance led the advancers after gaining 3.79% followed by Banking, Consumer goods and Energy  with 0.73%, 0.69 and 0.32% respectively.

Market breadth turned positive, as gainers outnumbered losers in the ratio of 47:17, while activities in volume and value were up after investors exchanged 411.37m shares worth N26.30bn. Volume was driven by trades in  Universal Insurance, Aiico, GTCO, UBA and Prestige Assurance.

Aradel Holdings and UACN were the best performing stocks, gaining 10% each, closing at N730.40 and N27.50per share respectively on the back of sentiment and market forces respectively. On the flip side, Tantalizer and Multiverse lost 9.77% and 9.73% respectively, closing at N14.40 and N6.51per share, purely on profit taking.

Market Outlook

We expect positive sentiment to continue amid profit taking, as bargain hunters position, while rebalancing their portfolios midst high inflation, 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.

Ambrose Omordion

CRO|Investdata Consulting Ltd

info@investdata.com.ng

ambrose.o@investdataonline.com

ambroseconsultants@yahoo.com

08028164085