Market Update for January 25
Midweek’s trading activities on the Nigerian Exchange extended its ranging mood and side trending as the benchmark NGX All-Share Index slipped lower still on a low traded volume and positive market breadth in the midst of mixed interest rates as the fixed income market rates and yields disconnected from the recent hike in MPR to 17.5%. Also at Wednesday’s NTB primary auction, rates came lower, sustaining the decline for the fifth consecutive offer. This is likely to impact the equity market positively in the near term, especially as the earnings reporting session kicked off with impressive numbers so far, despite these results are unaudited account for Q4 and full year 2022.
Notwithstanding, the ranging market and mixed signals from the technical indicators, as the candlestick formation are revealing bullish hammer, bottom and top reversal patterns at once. So, let watch out for Thursday’s trading for confirmation and the next direction. We expect market player’s reaction to full-year audited financials and corporate actions to give direction judging by the excess liquidity in the fixed income space as revealed by the oversubscription recorded in all tenor of TB offers despite the low rates.
The increased buying interest and mixed sentiment across some major sectors of the market despite the seemingly ranging position of the index action may continue to support the rally as revealed in the short and medium-term trends which remain intact, but today’s trading will give a clear direction as more companies release their scorecards. This may signal the continuation of this recovery in the month of January, notwithstanding uncertainties associated with the coming 2023 general elections, and possible post-election rally, all things being equal.
Technically, the NGX index action is still in the distribution phase in the face of a topping chart and bullish V-shape pattern that supports reversal or continuation of trend on a daily and weekly time frame. This just as the divergence between the index action and MACD at the end of last Friday trading on dally chart supports reversal of trend, due profit taking in blue chip stocks. Let us keep our gaze on market forces and money flow.
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Oil price oscillation continued as it trades at $86.13 per barrel, as Russia and Ukraine war enters a new level in the midst of recovery in China economy and increasing recession fear. Just as the geopolitical tension, high interest rate and inflation across the globe continue to threaten the world. 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 across markets.
Meanwhile, Wednesday’s equity trading started slightly in the upside but pulled back in the midday to oscillate for the rest of the session on positioning, profit taking in some blue-chip stocks and others, a situation that pushed the NGX’s index to an intraday low of 52,477.59 basis points from its high of 52,636.48bps, before closing slightly below its opening figure at 52,599.65bps.
Market technicals were positive and mixed, with lower volume of trade, 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 77% buy position and 23% sell volume. The total transaction volume index stood at 0.51 points, just as impetus behind the day’s performance was relatively strong as Money Flow Index looked flat at 55.32pts, from the previous day’s 55.05pts, indicating that funds entered the market, despite closing lower.
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Index and Market Caps
At the close of midweek’s trading the composite NGX All Share Index slide by 12.90 basis points, closing at 52,599.65bps, after opening at 52,612.55bps, representing a 0.02% drop, just as market capitalization fell by N7.03bn closing at N28.66tr from the previous day’s N28.67tr, which also represented a 0.02% value loss.
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Midweek’s downturn was driven by selloffs in the shares of Geregu Power, NB, Cadbury, UBA, Redstar, Thomaswy, Honeywell, Wapic and NGX Group, among others, which impacted mildly on Year-To-Date gain to 2.63%. Market capitalization YTD gain stood at N797.87bn, representing 2.63% above its opening level for the year.
Mixed Sector Indices
Sectorial performance indexes for the session were mixed, as the NGX Insurance and Banking closed lower by 0.69% and 0.34% respectively, while NGX Consumer goods was up by 0.34% Just Energy and Industrial goods closed flat.
Market breadth was positive as gainers outnumbered losers in the ratio of 21:16. whereas activities in volume and value were down, after investors exchanged 116.45m shares worth N2.67bn. Volume was driven by trades in Mutual Benefits, Transcorp, Geregu, FBNH and GTCO.
RT Briscoe and Tripple Gee were the best performing stocks, after gaining 10% each, closing at N0.33 and N0.88 per share respectively on market forces and impressive Q3 numbers. On the flip side, Thomas Watt and Cornerstone Insurance lost 9.66% and 6.90% respectively, closing at N1.31 and N0.54per share, purely on profit taking.
We expect mixed sentiment and position taking on portfolio rebalancing in the midst of divergence in fixed income rates and MPR adjustment to 17.5%, in the face of Q4 earnings expectations 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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