Profit Taking, Portfolio Reshuffling Linger On NGX, As Investors Hedge Against Inflation

Market Update for November 9

Positive sentiment continued on the Nigerian Exchange Thursday in the midst of higher treasury yields, as investors increased buying interests in equities as part of hedging against the spiraling inflation that has supported some company performances, as reflected on their latest scorecards. This, is also likely to support their payout in form of dividend upon which share prices feed. This mixed bag of rising fixed income market yields will continue to influence portfolio management, rebalancing and readjustment ahead of macroeconomic reports, like the October consumer price index, Q3 GDP, the Monetary Policy Committee meeting, and year end seasonality.
The benchmark NGX All-Share index closed marginally higher on a very high traded volume and slightly negative market breadth, thereby extending the bull transition for the fifth consecutive session, on a buying sentiment as revealed by trading metrics. Also, market players continue to digest this latest TB rates hike and positive corporate earnings as guide to reposition their portfolios ahead of year end. Also noteworthy is the equally mixed outlook for money and bond market yields in the face of slow economic growth and heightened insecurity across the nation. It is for this reason many countries have issued travel advisory to their citizens as where to go, or avoid in Nigeria. This, we must not, and sadly too, is not good for the economy, because no foreign investor will come into an unsafe country, except for the high risk takers.
Money flow index signaled funds entering the market, while hammer candlestick formation at the top indicates a correction or pullback is underway, even when the NGX index is making higher highs to test a new all-time high of 70,888.97 points, thereby extending the markup phase. So, continuation or reversal needs to be confirmed as the top chart pattern of the index supports a reversal. Traders needs to watch out for this, even as the NGX index action is trading above the T-Line to signal strong momentum on a very high volatility.
To navigate the rest of the quarter and year profitably using fundamental and technical analysis, join investdata’s live sessions at noon every 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 mixed trend and volume pattern, it is time to shop for undervalued stocks, sector rotation, go for defensive stocks at the next insider playing opportunity.
Oil price oscillation continued, trading at $80.33 per barrel in the midst of demand concerns, as well as the growing and weak economic data from China. It is set for another weekly loss in the face of the ongoing Middle East conflict, despite the rate pause by central banks and cooling inflation. With geopolitical tensions rising across the globe at a time the Russia-Ukraine war gradually approaches its third year, and remains a major concern with much more at stake than previously thought. The supply tightening due to the Russia-Ukraine war will propel the up and down movement in oil price, which also drive market volatility across the globe.
Thursday’s trading started slightly in the red till midday before rebounding at early afternoon and oscillated for the rest of the session on rekindled buying interest in blue chip stocks and profit taking, a situation that pushed the Index to an intraday high of 70,888.97bps from its lows of 70,645.15ps, before closing above its opening figure at 70,819.58bps.
Market technicals were positive and strong with a higher volume traded, when compared to the previous session, in the midst of breadth favoring the bears on a buying sentiments as revealed by Investdata’s Sentiments Report showing 72% buy position and 28% sell volume. The total transaction volume index stood at 1.53 points, just as the momentum behind the day’s performance was strong, with Money Flow Index reading 83.32pts, from the previous day’s 78.52pts, indicating that funds entered the market.
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Index and Market Caps
The NGX All-Share Index, at the close of Thursday’s trading inched up by 64.27bps, closing at 70,819.58bps, from the 70,773.31bps opening level, representing a 0.07% up. Market capitalization rose by N26bn, closing at N38.91tr, from the previous day’s N38.89tr, which also represented a 0.07% value gain.
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Meanwhile, the session upturn was driven by position taking in UACN, UBA,NB, FBNH, GTCO, Fidelity Bank, UPDC and Japaul Gold, among others, impacting positively on Year-To-Date gain which inched up to 38.18%, while Market Capitalization YTD gain stood at N10.55tr, representing a 39.67% rise above its opening level for the year.

Bearish Sector Indices
Sectoral performance indexes were, nonetheless, down save for the NGX Banking index that closed 0.21% higher, while NGX Insurance led the decliners after losing 1.05%, followed by Consumer and Industrial goods with 0.06% and 0.02% respectively. 08030573452
Market breadth turned slightly negative as losers outnumbered gainers in the ratio of 26:25, while activities in volume and value terms were up, after players exchanged 569.19m shares worth N16.79bn, driven by trades in Japaul Gold, Atanbic IBTCM UBA, FBNH and Fidelity Bank.
UPDC and SCOA were the best performing stocks, gaining 9.91% and 9.73% respectively, closing at N1.22 and N1.24per share respectively, on market sentiment and forces. On the flip side, VFD Group and Multiverse lost 10% and 9.38%, closing at N184.50 and N2.90per share, purely on the back of selloffs and profit taking.

Market Outlook
Being the last trading day of the week, we expect profit taking and mixed sentiments on portfolio rebalancing on the strength of the better-than-expected corporate numbers released and expected inflation reports in the face of sector rotation.
Meanwhile, all eyes are on the fiscal and monetary authorities to give direction of the government reforms and policies so far.

Take Action

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4. Real Estate Investment Opportunities in the Hyper-Inflationary Environment Of Today
5. Understanding Commodity Markets For Profitable Portfolio Diversification in 2024
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CRO|Investdata Consulting Ltd
Tel: 08028164085, 08179547605