Market Update for January 17
Tuesday’s trading activities on the Nigerian Exchange was mixed and volatile, with the benchmark NGX All-Share index rebounding, and closing higher in the midst of buying interests and strong momentum, despite the seeming profit taking in some medium and low stocks. The reversed sentiment was driven by position taking in telecom giant- Airtel Africa, and other dividend paying companies at a time all eyes are on the Q4 numbers expected to start hitting the market any moment from now.
Meanwhile, market players continue to digest the December Consumer Price Index released on Monday indicating a slight decline in inflation to 21.34% from 21.47% in November, pointing the likely direction of market and the general economy ahead of next week’s meeting of the Central Bank of Nigeria Monetary Policy Committee. It is noteworthy also that the fixed income market rates and yields in Nigeria are already looking southward.
The NGX Index’s structure at end Tuesday’s trading revealed a breakout of another strong resistance level of 52,519.84 basis points that signals continuation of the uptrend, depending on market forces as midweek’s trading session opens, and the scheduled board meetings of many companies to consider and approve the release of their unaudited or audited Q4 and full year financials draw closer.
Position taking across some major sectors of the market may continue to support the recovery as revealed in the short, medium and long term trend, despite the seeming uncertainties and anxiety trailing the 2023 general elections, beginning with the Presidential and National Assembly elections slated for February 25, 2023. We cannot ignore the possibility of a post-election rally, all things being equal.
Technically, the NGX index’s action has extended its markup phase in the face of a topping chart, cup and handle pattern that supports reversal or continuation of trend on a daily and weekly time frame, as MACD signal line and histogram at the end of day trading on a dally chart supports reversal of trend and bullish divergence. Despite position taking that hit insurance stocks and others. let us keep our gaze on market forces and money flow.
Momentum indicators appear to remain stronger, as revealed ADX reading 68.06, just as, RSI and Money Flow Index are looking up to read 78.47 and 83.60 points against the previous session 76.64 and 83.21 points respectively. Volume trading pattern suggests the return of many players who had been seating on the fence before now, including institutional investors holding cash before now to confirm the primary’s market direction, especially given the anticipated financial market and economic reset in 2023, that comes with huge opportunities to create wealth for smart investors and traders.
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Oil price oscillation continued, as it rebounded to trade at $86.71 per barrel on Venezuela suspension oil exports and OPEC expansion of control on oil markets China demand for oil in the midst of cases of Covid-19 in China, geopolitical tension and fear of recession. Also, due to high interest rate and inflation across the globe. 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.
Meanwhile Tuesday’s trading started on the upside and oscillated for the rest of the session due to profit and position taking in some highly priced stocks and blue chip companies, a situation that pushed the NGX’s index to an intraday high of 52,737.72bps from its lows of 52,329.29bps, before closing above its opening level at 52,701.31bps.
Market technicals were positive and mixed, with higher volume of trade compared to the previous session in the midst of positive breadth and buying sentiment as revealed by Investdata’s Sentiments Report showing 91% buy position and 9% sell volume. The total transaction volume index stood at 1.02 points, just as momentum behind the day’s performance was strong as Money Flow Index looked up at 83.60pts, from the previous day’s 83.21pts, indicating that funds entered the market.
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Index and Market Caps
The composite NGXASI at the end of the day trading gained by 352.49 basis points, closing at 52,701.31bps after opening at 52.512.bps, representing a 0.67%, just as market capitalization rose by N191.999bn closing at N28.70tr from the previous day’s N28.51tr, which also represented a 0.67% appreciation in value.
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Tuesday’s upturn was driven by demand for shares of Airtel, Vitafoam, Flourmill, GTCO, PZ Cussons, ETI, Honeywell, NPF Microfinance and Chams, among others, which impacted positively on Year-To-Date gain, raising it to 2.83%. Market capitalization YTD gain stood at N812bn, representing 2.83% above its opening level for the year.
Bullish Sector Indices
Sectorial performance indexes for the session closed in the green, except for the NGX Insurance that lost a marginal 0.08% while NGX Consumer goods led the advancers with 0.53%, followed by Banking, Energy and Industrial goods with 0.19%, 0.19% and 0.08% respectively.
Market breadth was positive as gainers outnumbered losers in the ratio of 19:15; whereas activities in volume and value were up, after stockbrokers traded 228.49m shares worth N4.44bn. Volume was driven by trades in Sterling Bank, Chams, GTCO, Zenith Bank and Royal Exchange.
UPDCREIT and MRS Oil were the best performing stocks, after gaining 10% and 9.93% respectively, closing at N3.30 and N15.50 per share respectively on market forces and earnings expectation. On the flip side, UPDC and Geregu lost 6.93% and 6.71% respectively, closing at N0.94 and N139.00per share, purely on profit taking.
Market Outlook
We expect positive sentiment and nixed trend on profit taking as investors position ahead of Q4 earnings reports and MPC meeting outcome next week in the face of election uncertainty, as pullback at this point add more strength to upside potential. As such, investors should take advantage of price correction buy value. Also looking at the trends and events across the globe and national.
Crucial Announcement
As the new year begins, you need to get started with activities that will help you in achieving your goals for the year. To this end, I must tell you that events and activities that happened in 2022 will shape 2023.
As a result, it is only investors who have improved on their skills and knowledge that will be able to scale through and withstand circumstances beyond their control in the market.
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Ambrose Omordion
CRO|Investdata Consulting Ltd
ambrose.o@investdataonline.com
Tel: 08028164085, 08179547605
