Market Update for January 9
It was mixed trading session on the Nigerian Exchange on Monday, as profit taking resurfaced in some major sectors of the market, despite closing higher on the help of price appreciation of telecoms grants to continue the uptrend and extending the bull transition for two consecutive days on a less than average traded volume and positive market breadth to start the first full trading week for the year 2023.
Meanwhile, more companies continue to notify the exchange of its closed period and board meetings. Investors are also keeping an eye on macroeconomic reports expected this month, particularly the consumer price index and the first meeting of the Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC) for the year, as well as unaudited Q4 financials. These are likely to drive the ongoing volatility in the face of the usual January effect that had been positive in the previous years and month.
The mixed market sentiments and strong momentum continued to support the recovery as revealed in the short, medium and long term trend. Also forming top pattern that support reversal at the end of Monday trading, which need to be confirm. Just as volatility and recovery are likely to continue for the rest of the month due to the expected full-year earnings and corporate actions that would support price.
This is however, notwithstanding uncertainties associated with the coming 2023 general elections, and a possible post-election rally, all things being equal. As NGX’s historical peak of earnings reporting season draw closer, it is expected to attract more liquidity and buying interest depending on earnings surprises and disappointments. Also, as the rates and yields in the fixed income market have been on the decline across all tenor as seen in the last TB primary market auction offer for 2022.
Technically, the NGX index action is on markup phase in the midst of a topping chart and bullish V-shape pattern that supports reversal or continuation of trend on a daily time frame, as the convergence between the index action and MACD on a dally chart supports continuation of trend, in the midst of profit taking that hit some financial stocks. let us keep our gaze on market forces and money flow.
Momentum indicators at the end of the day trading appear to remain stronger, as revealed by the ADX reading 64.01, just as, RSI and Money Flow Index are looking up to read 78.33 and 90.61 points against the previous session 75.73 and 90.57 points respectively. Volume trading pattern suggests the gradual return of many players who had been seating on the fence before now, including institutional investors holding cash to confirm the primary’s market direction, especially given the anticipated financial market and economic reset in 2023, that comes with huge opportunities to create wealth for smart investors and traders.
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Oil price oscillation continued, pulling back again to trade at $79.15 per barrel on increasing fear of global recession in the midst of China reopening borders and Covid 19 cases. Just as the geopolitical tension and fear of recession as a result of high interest rate and inflation across the globe. Also, supply tightened due to the Russia-Ukraine war that has lingered so far. The up and down movement of oil price also continues to drive volatility.
Meanwhile, Monday’s trading opened in the upside and oscillated throughout the session on profit and position taking in some highly priced stocks, medium and low cap companies, a situation that pushed the NGX’s index to an intraday high of 51,841.05 basis points from its lows of 51,207.13bps before closing sharply above its opening level at 51,700.36bps.
Market technicals were positive and mixed, with higher volume of trade compared to the previous session in the midst of breadth favoring the bulls on buying sentiment as revealed by Investdata’s Sentiments Report showing 78% buy position and 22% sell volume. The total transaction volume index stood at 1.12 points, just as momentum behind the day’s performance was strong as Money Flow Index looked up at 90.61pts, from the previous day’s 90.57pts, indicating that funds entered the market.
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Index and Market Caps
The key performance NGX All-Share index, at the end of Monday trading gained 478.02 basis points, closing at 51,700.36bps after opening at 51,222.34bps, representing a 0.93%, just as market capitalization rose by N260.38bn closing at N28.16tr from the previous day’s N27.89tr, which also represented a 0.93% appreciation in value.
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Monday’s upturn was driven by demand for Airtel Africa, Ucap, May & Baker, Wapic, CHI Plc and Thomaswy, among others, which impacted positively on Year-To-Date gain of 0.88%. Market capitalization YTD gain stood at N220.19bn, representing 0.86% above its opening level for the year.
Mixed Sector Indices
Sectorial performance indexes for the session were mixed, as NGX Banking and Insurance closed lower by 1.13% and 0.70% respectively, while NGX Consumer goods gained 0.19%. Just as NGX Industrial goods and Energy closed flat.
Market breadth was positive as gainers outnumbered losers in the ratio of 18:16; whereas activities in volume and value were mixed, after investors exchanged 220.73m shares worth N2.70bn. Volume was driven by trades in Sterling Bank, UBA, FBNH, Accesscorp and Zenith Bank.
Thomaswy and ABC Transport were the best performing stocks, after gaining 9.28% and 8.00%, closing at N1.06 and N0.27 per share respectively on market forces. On the flip side, UBN and Wema Bank lost 8.63% and 8.21% respectively, closing at N6.35 and N3.58per share, purely on profit taking.
We expect positive sentiments and mixed trend on profit taking and positioning ahead of CPI data and volatility in the face of Q4 earnings reports and election uncertainty, as pullback at this point 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.
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