Market Update for December 8
Fear and selloffs on the Nigerian Exchange are gradually abating as of midweek’s trading, as the benchmark index sustained two successive sessions of positive outing on a very high traded volume and positive breadth to signal a new uptrend, in line with the historical trends and seasonality associated with December.
There was increased buying interest across sectors, especially banking, where dividend payment has been consistent over the years and the numbers released so far reveal the possibility of dividend growth despite the mixed earnings posted by some of these banks. There is also the factor of low price attraction for blue chip stocks that suffered huge losses during the pullbacks, as bargain hunters positioned in low, medium and high cap stocks that have the potentials to rally as the year winds down in expectation of full-year earnings reports of the companies with December year-end.
The trading metrics at midweek reflected a positive sentiment that supports recovery and accumulation after the decline phase of the market cycle that ushered in the month of December on a bearish note after breaking down the 42,000 mark to test 41,927.16 before rebounding on a strong volume. As a result, it created opportunities for discerning investors and traders to buy in as reversal is confirming, especially in the companies with a consistent track record of dividend payment with strong fundamentals and growth prospect that will support further price growth and dividend payout.
Technically, the NGX index’s action has turned up on renewed buying interests, as momentum indicators for the day were green, while the ADX is reading 40.42, RSI at 48.72 and Money Flow Index fell to 44.49 points on the daily chart. The continuation of this trend depends largely on the interplay of market forces and inflow of funds into equity space as market open on Thursday.
Midweek’s trading opened slight on the upside, which was sustained for the rest of the day on demand for stocks across the sectors, a situation that pushed the NGX index to an intraday high of 42,445.32 basis points from its lows of 42,000.96bps before closing above the opening points at 42,435.16bps.
Market technicals for the session were positive and strong as volume traded was slightly lower than the previous day’s in the midst of positive breadth and buying pressure as revealed by Investdata’s Sentiment Report showing 98% buy position and 2% sell volume. The total transaction volume index stood at 2.02 points, just as momentum behind the day’s performance remained relatively strong. Money Flow Index read 44.49 points, from the previous day’s 38.72points, indicating that funds entered the market.
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Index and Mkt Cap Movement
The composite NGX All-Share Index at the end of the day’s trading gained 416.21 basis points, at 42,435.16bps after opening at 42,018.92bps, representing a 1% growth, just as markete capitalization rose by N217.20bn, closing at N22.14tr, from the opening value of N21.93tr, also representing 1% appreciation in value.
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The upturn was driven by position taking in MTNN, GTCO, Lafarge Africa, Oando, Access Bank, GSK, Ecobank Transnational Incorporated, Honeywell and UBA, among others, which impacted positively on Year-To-Date gain, increased it to 5.37%. Market capitalization stood at N1.12tr YTD, representing a 5.12% growth from the year’s opening value.
Bullish Sector Indices
Sectoral performance indexes were up, led by NGX Banking, after gaining 1.83%, and followed by Oil/Gas, Consumers, Insurance and Industrial Goods with 1.14%, 0.64%, 0.62% and 0.10% respectively.
Market breadth remain positive as gainers outnumbered losers in the ratio of 20:11, while activities in volume and value terms were up after investors exchanged 649.76m shares worth N7.20bn, compared to the previous day’s 639.42m units valued at N6.63bn. Volume was boosted by trades in FBNH, Sterling Bank, GTCO, UBA and Access Bank.
Living Trust Mortgage and Meyer were the best-performing stocks after gaining 9.1% and 77% respectively, closing at N0.96 and N0.28per share respectively on market forces. On the flip side, Cutix and Royal Exchange Assurance lost 9.70% and 8.1% respectively, closing at N2.61 and N0.57 per share, purely on selloffs and profit taking.
Market Outlook
We expect a sustained trend but on slower momentum after NGX index tested 50 day moving average and bounced back on a high buying volume as assets rebalancing with seasonality historical trends and patterns likely to influence equity prices ahead of year-end window dressing. The high volume traded in the midst of retracement is creating new buy opportunities on the strength of the Q3 numbers. Also, candlestick formation and volume traded during the session revealed that institutional players are buying especially banking stocks and other blue-chip companies, as the index rallied on a high volume. It is equally noteworthy that during a ranging market many players seat on the fence waiting for a breakout or down before jumping into any 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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Ambrose Omordion
CRO|Investdata Consulting Ltd
ambrose.o@investdataonline.com
Tel: 08028164085, 08179547605
