Positive Sentiment On NGX As Investors Position Ahead Of 2023Q4 Reports, Dec Inflation Data, MPC Meeting

Market Update for January   8

The positive outing on the Nigerian Exchange was sustained on Monday, starting the first full trading week of the month of January and the year 2024 on accumulation of positions across major sectors of the market. The benchmark NGX All-Share crossed the 80,000 psychological line, closing higher on a huge traded volume and positive market breadth, thereby extending the bull rampage for the seventh successive session in the midst of funds flowing into the equity space to support the markup phase while indexes and prices are hitting new highs. All eyes are still on the December Consumer Price Index and expected full-year corporate earnings of quoted companies, ahead of this month’s policy meeting of the Central Bank of Nigeria (CBN).

The bull-run of the market 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. More companies- PZ Cussons, Berger Paints, NPF Microfinance and others notified the NGX and investors of their board meetings and close 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 action remains above the T-line as the market makes another higher highs on increased buying interests and positive momentum to trade above all the Moving Averages on the daily, weekly and monthly time frame in the midst of volatile and positive sentiments. The candlestick formation at the end of the session is revealing a continuation of trend that needs confirmation as trading opens on Tuesday. 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 this week OMO and TB primary market auction being the first in the new year.

Momentum indicators continue looking stronger since the beginning of the year, as the ADX read 59.33, just as, RSI and Money Flow Index are reading 91.36 and 91.40 points against the previous session 90.60 and 90.47 points respectively. Volume trading pattern suggests the return of many players who had gone on holidays and institutional investors accumulating more positions as others investment windows returns remain below inflation.  As the anticipated financial market and economic reset in 2024, comes with huge opportunities to create wealth for smart investors and traders.

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Oil price oscillation continued, as it pulls back to trade at $76.19 per barrel in the midst of rising tensions as middle east conflicts escalating with recent strikes here and there over that region, 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.

Monday’s trading opened on the upside and it was sustained for the rest of the session, despite oscillating on buying interest in some stocks and profit taking in others, a situation that pushed the NGX’s index to an intraday high of 80,328.60 basis points from its lows of 79,562.10bps before closing above its opening level at 80,324.53 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 99% buy position and 1% sell volume. The total transaction volume index stood at 2.21 points, just as momentum behind the day’s performance was strong as Money Flow Index looking up at 91.40pts, from the previous day’s 90.47pts, indicating that funds entered the market.

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Index and Market Caps

The benchmark NGX All-Share Index, at the end of trading gained 659.87bps, closing at 80,324.53bps after opening at 79,664.66bps, representing a 0.83% growth, just as market capitalization rose by N348bn closing at N43.96tr from the previous day’s N43.59tr, which also represented a 0.83% value gain.

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Meanwhile, Monday’s upturn was driven by accumulation in the shares of, Wapco, Conoil, Transcorp, ETI, Unilever, GTCO, Zenith Bank, UBA, Accescorp, Mansard and Aiico, among others, which impacted positively on Year-To-Date gain of 7.43%. Market capitalization YTD gain stood at N3.21 trillion, representing 7.43% above its opening level for the year.

Bullish Sector Indices

All sectorial performance indexes for the session were in green, led by NGX Insurance index after gaining 6.28%, followed by Banking, Industrial, Energy and Consumer goods with 02.23%, 0.67%, 0.59% and 0.13% respectively.

Market breadth was positive as gainers outnumbered losers in the ratio of 53:17; whereas transactions in volume and value were up, after players exchanged 1.19 billion shares worth N15.26bn. Volume was driven by trades in Transcorp, FCMB, Fidelity Bank, SterlingNG and Unity Bank.

Julius Berger and Cornerstone Insurance were the best performing stocks, gaining 10% each, closing at N46.75 and N1.87per share respectively on market forces and expectation of earnings.  On the flip side, Daarcom and Eterna lost 9.30% and 8.79% respectively, closing at N1.17 and N15.05per share, purely on profit taking.

Market Outlook

We expect positive sentiment and profit taking to continue, as NGX crosses 80,000 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

info@investdata.com.ng

ambrose.o@investdataonline.com

ambroseconsultants@yahoo.com

Tel: 08028164085, 08179547605

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