Market Update for February 12
The bullish momentum on the Nigerian Exchange continued at the midweek, following the increased buying interest in blue chip companies across the major sectors of the market. This weighed positively on the benchmark NGX All-Share Index as it closed higher on a low traded volume and positive market internals, thereby extending the bull transition for two straight sessions, breaking out the 107,000 basis points psychological line reaching a new historic all-time high of 107,822.50bps after testing 107,861.20. This reveal strong sentiments and momentum that calls for caution as more stocks hit their new 52-week highs in the midst of the ongoing earnings reporting season.
All eyes are on the expected full-year audited financial statements and dividend announcements which have continued to guide positioning and money flow into the market. The renewed buying interest in consumer and industrial goods stocks supported the markup phase that is creating new buying opportunities in few stocks ahead of their earnings reports, the January consumer price index figure and the Monetary Policy Committee meeting of the Central Bank of Nigeria scheduled for next week.
This uptrend in the midst of ongoing volatility is due to rotation on the strength of company performance that will help the market to sustain a new high with focus on low valuation and growth opportunities inherent in the different stocks and industries.
During the session Royal Exchange informed the market of its office relocation and change of company secretary.
The NGX’s waves and uptrend are portfolio rebalancing-driven in addition to profit taking in preparation for more audited scorecards inflow and dividend expectation in this Q1. Importantly also, dividend payout and yields remain very important to players at a time like this, when there is oversubscription in TB auction and rates are declining. Knowing that one day does not change a trend and it does not change outlook especially with reactions to earnings as market players are digesting these impressive numbers and making their decisions.
Investors should target dividend paying companies and growth stocks with higher upside potentials, even as few number of companies have room for more rally. This is due to market had entered overbought region that signal profit taking or pullbacks are underway in the midst of positive sentiments for some sectors, consolidation moves in some industries and expectations of positive corporate numbers from some others, based on their quarterly and full year unaudited performance, coupled with their dividend payouts history.
Technically, money flow and other momentum tools were up, revealing strength and present opportunity of buying low and selling high in the midst ongoing volatility and buying sentiment. As the index inched up to signal buy opportunities, thereby creating the perfect setup for high probability of continuation to catch dividend season 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 face of changing market fundamentals and technicals on the NGX and the economy.
The NGX continued its markup phase again on a buying sentiment, as candlestick formation and momentum indicators still reveal uptrend. As ADX was up to read 34.05points, while RSI and Money Flow Index were up at 77.73 and 79.20 points against the previous session’s 72.94 and 78.98 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 smart money are making effort to markup prices in the market amid players revaluing the market and short term opportunities, looking at economic events in the face of policy direction of the government that look inconsistent and global economic outlook in the face of trade war tension.
To navigate the rest of Q1 and beyond profitably, it is important to run with economic events, fundamental and technical analysis, join investdata live sessions at noon every Monday, Wednesday and Friday’s trading session“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 pullbacks. Despite the oscillating volume of transaction witnessed in recent time, it is time to position in undervalued stocks, sectors and the next insider playing opportunity.
Oil prices at midweek slowdown to continue its oscillation, trading at $75.28 per barrel in the midst of US increased crude inventory and trade war face dampening sentiment in commodity market. Even as OPEC delay production cut to April 2025. Looking at the ceasefire deal in the Middle East, while Russia and Ukraine war continue. As all eyes are on US President Policy uncertainty continued to drive volatility. The geopolitical tension across many economies remains a concern to the global economy and energy consumption in 2025. This trend may likely continue, 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.
Meanwhile, Wednesday’s trading opened in the green and was sustained for the rest of the session, on the demand of Dangote Cement, Presco and banking stocks. This situation pushed the NGX’s index to an intra-day high of 107.861.20bps from its lows of 106,613.60bps, before closing above its opening level at 107,823bps.
Market technicals were positive and mixed with lower 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 97% buy position and 3% sell volume. The total transaction volume index stood at 0.81points, just as impetus behind the day’s performance was strong as Money Flow Index inched up to read 79.20pts, from the previous day’s 78.98pts, indicating that funds entered the market.
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Index and Market Caps
The NGX All-Share Index gained 1,247.55 basis points, closing at 107,822.53bps from 106,574.98bps, representing a 1.17% growth, while market capitalization rose by N778.550bn, at N67.27r from the previous day’s N66.50tr, representing a 1.17% value gain.
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The upturn was driven by the demand for the shares of Dangote Cement, Presco, Nigerian Breweries, Dangote Sugar, Unilever, FBNH, UBA, GTCO, Accesscorp, Honeywell, Transcorp, SterlingNG and Eterna, among others. This impacted positively on Year-To-Date gain that increased to 4.74%, while Market capitalization gain stood at N5.68tr, representing 7.12% increase over its opening level for the year.
Bullish Sector Indices
Sectoral performance indexes were in green, except for the NGX Insurance index that closed 0.04% lower, while the NGX Industrial Goods index led the advancers after gaining 2.11%% followed by Consumer goods, Banking and Energy with 1.44%, 0.40% and 0.20% respectively.
Market breadth was positive, as gainers outnumbered losers in the ratio of 51:16, while activities in volume and value were down after investors exchanged 422.62 million shares worth N9.95bn. Volume was driven by trades in SterlingNG, Ellah Lakes, Zenith Bank, Accesscorp and Aiico.
VFDGroup and Ikeja Hotel were the best performing stocks, gaining 10% each, closing at N52.80 and N14.85 per share respectively on the back of sentiment and strong earnings power respectively. On the flip side, CWG and Regency Insurance lost 8.95% and 7.89% respectively, closing at N8.65 and N0.70per share, purely on profit taking and selloffs.
Market Outlook
We expect mixed sentiment to continue on profit taking and repositioning on strength of corporate numbers, as more earnings are expected to hit the market with dividend announcement. Also, sector rotation and portfolio rebalancing continued in the market with investors taking advantage of price 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
