Selected Stocks To Watch, As NGX Rally Persists Amidst Positive Earnings, Dividends Expectation
The nation’s equity market has had a relatively strong rally and increased buying interest, especially among stocks in the NGX-30 index over the last couple of weeks.
This followed a positive sentiment for the better-than-expected corporate earnings, and the ADX that reveal the strength behind the market’s uptrend spiked at 60.26 points on the daily time frame and 38.93 point on the weekly chart. From the low to the high, it swung 2-3% on a daily basis. With the recent happening in the area of rates, which started from the decision by members of the CBN Monetary Policy Committee to retain the benchmark Monetary Policy Rare at 11.5%.
We are starting to see the NTB primary market auction rate dropping, while fixed income yields oscillate, and some stay flat
The market has, so far, maintained a five-week rally, the longest in the last five years, according Investdata Research findings, as market players react to the emerging positive earnings news, among others. As these positive news hit the wires, money flows into the stock market, buying in the slightest dip and lucrative dividend paying and speculative stocks.
Having said this, the market still has inherent strength to continue its rally. However, be careful of profit taking and the attendant volatility associated with every earnings reporting season, with all eyes on corporate actions.
As technical analysts, our gaze must be on the charts and patterns, rather than the news.
Fear often results in traders liquidating their stock holdings, there causing losses and pullback in the benchmark NGX All-Share Index as well.
Recently there was profit booking in some sectors and individual stocks as revealed by the charts, showing higher highs and lower lows, meaning that investors are shopping around all over the place. The hope is that there will be a breakout of these levels as the market gears up for a continue swing to the upside.
On the other hand, crude oil price has gone through a series of rallies and controlled pullbacks or pauses. The charts indicate a running correction to the upside. With world events, supply chain issues, and so on, will oil price hit the $100 mark? And if it does, what could this mean for Nigeria’s100ock market and economy.
The relatively high volume traded in the midst of uptrend and recovery moves are creating new buy opportunities on the strength of the Q3 and unaudited Q4 numbers. Also, candlestick formation and volume traded during the session revealed that institutional players are already buying.
It is equally noteworthy that during this rally many players are looking forward to breakout or down before jumping or accumulate more in their position. Even as many stocks are trading within their buy ranges, a situation expected to attract more funds into the stock market, given the Dividend Yield capable of serving as a hedge against inflation.
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