Market Update for December 11
The bullish momentum on the Nigerian Exchange continued at the midweek, as buying interest increased in some middle to highly capitalized stocks across the major sectors of the market. This sustained the recovery and markup phase of NGX ahead of Santa Claus rally and year-end. The benchmark NGX All-Share Index closed higher to extend the bull transition for two consecutive sessions on a low traded volume and positive market breadth as bargain hunters take advantage of low valuation to buy value stocks in expectation of Q4 numbers and unaudited full-year earnings reporting of 2024.
The buying sentiment and expanded breadth are reflections of inflow of funds into the equity space, as sector rotation and portfolio rebalancing continued to ushers in the New Year 2025. Despite forming a top reversal chart pattern that signal a reversal or continuation of trend that needs confirmation. The gradual return of smart money at the current state and timing of the market creates buying opportunities for discerning players ahead of January effects that had turned a positive pattern and trends on the NGX in recent years to guide positioning in the right stocks at the right prices. The nation’s economic managers continue to trade the economy for foreign inflow with high interest rate that is driving low productivity and failed to checkmate inflation of today.
The NGX’s index cup and handle chart pattern formation reveals bullish trend underway, as players are looking to positive trend, with increasing number of companies hitting a new 52-week high. Just as end of the year positioning continued on the back of cross deals and others in the market. During the session, the following companies: VFD Group and Red Star Express released their Q1 and Q3 2025 earnings forecast respectively, to guide the investing public.
Money flow and other momentum tools were up, presenting buy opportunities for market players who understand the importance of buying low and selling high in any market condition in the midst ongoing volatility and buying sentiment. As the breakouts the strong resistance levels of 98,273.64 basis points and 98,340.10ps to sustain uptrend, thereby creating the perfect setup for high probability of continuation to catch end of year 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 relatively strength in the midst of changing market fundamentals and technicals on the NGX and the economy.
Technically, the NGX is on a markup phase in the midst of recovery, as candlestick formation and momentum indicators reveal a somewhat strength in the market. As ADX is looking down to read 23.48 points, while RSI and Money Flow Index were up at 59.90 and 60.01 points against the previous session’s 55.94 and 55.21 points respectively. Consequently, market players should watch this current trend and trade wisely in the face of funds entered 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 buying interest and selloffs in the market amid players revaluing the market and economic events in the face of policy direction of the government that look inconsistent.
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Oil prices at midweek were up to continue its oscillation, trading at $73.50 per barrel in the midst of China increasing oil importation and expected US rate cut. Even as OPEC delay production hike in the face of ongoing geopolitical tensions in the Middle East and Russia war with Ukraine. As US President-elect tariff threats its trade’s partners and global economy outlook. The rising geopolitical uncertainties across many economies remains a threat to the global economy and energy consumption. This trend may likely continue for the rest of 2024, 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, midweek’s trading opened in the green and was sustained for the rest of the session, on accumulation of blue chip companies and others stocks. This situation pushed the NGX’s index to an intra-day high of 98,509.68bps from its lows of 98,186.42bps, before closing above its opening level at 98.509.68bps.
Market technicals were positive and strong with lower volume when compared to the previous session in the midst of breadth favoring the bulls on a buying pressure as revealed by Investdata’s Sentiments Report showing 100% buy position and 0% sell volume. The total transaction volume index stood at 0.59 points, just as impetus behind the day’s performance was relatively strong as Money Flow Index inched up to read 60.01pts, from the previous day’s 55.21pts, indicating that funds entered the market.
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Index and Market Caps
The composite NGX All-Share Index at the end of the trading session gained 302.71 basis points, closing at 98,509.68bps from 98,206.97bps, representing a 0.31% up, while market capitalization rose by N183.50.bn, at N59.72tr from the previous day’s N59.53tr, representing a 0.31% appreciation in value.
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The upturn was driven by buying interests in the shares of Aradel, Conoil, Wapco, Oando, UBA, FBNH, Golden Breweries and Tantalizer, among others. This impacted positively on Year-To-Date gain as it inched up to 31.74%, while Market capitalization gain stood at N15.32tr, representing 45.95% growth over its opening level for the year.
Bullish Sector Indices
Sectoral performance indexes were up, led by NGX Oil& Gas after gaining 2.59% followed Insurance, Industrial goods, Banking and Consumer goods with 0.15%, 0.06% and 0.04% respectively.
Market breadth turned positive, as gainers outnumbered losers in the ratio of 34:17, while activities in volume and value were down after investors exchanged 320,10m shares worth N6.48bn. Volume was driven by trades in Etranzact, Universal Insurance, Zenith Bank, FBNH and UBA.
Africa Prudential and Conoil were the best performing stocks, gaining 10% each, closing at N14.30 and N350.00 per share respectively on the back of sentiment and market forces respectively. On the flip side, Julius Berger and NSLTech lost 10% and 9.52% respectively, closing at N155.25 and N0.57per share, purely on profit taking and selloffs.
Market Outlook
We expect volatility to continue amid uptrend, as bargain hunters position, while rebalancing their portfolios midst profit taking, low valuation and position taking by smart money for year-end. Also, sector rotation and portfolio rebalancing continued in the market with investors taking advantage of pullbacks and 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
