Market Update for December 9
Up and down movement on the Nigerian Exchange continued on the first trading session of the week, as the benchmark NGX All-Share index closed lower to short-live the previous gain due to profit taking and selloffs in some major sectors of the market. Market players obviously took profit from Lafarge Africa, Oando, Accesscorp and others a situation that outweighed the buying interest in Okomu Oil, Stanbic IBTC and others in the face of sector rotation for Q4 numbers and the dividend income season in first quarter of 2025.
There was also mixed sentiment in the midst of low traded volume, negative market breadth and selling momentum, as there was no supply bar indicating supply has been removed, which can lead to price markup by smart money. This needs confirmation, as pullback at the current state and timing of the market creates buying opportunities for discerning players ahead of the Santa Claus rally in December and early January. These, as well as the January effects that had turned a positive pattern and trends are what the market should look forward to by taking action and 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 that signal a bullish trend underway, as players are looking to a reversal of the current trend, with NGXGroup, Africa Prudential, Conoil, Golden Breweries and NGX Insurance index hitting a new 52-week high at the end of Monday’s trading. With the continued end of the year positioning on the back of cross deals in the market.
During the session, the following companies: Geregu Power, Abbey Building, Eterna, Sunu Assurance and Mrs Oil released their Q1 2025 earnings forecast to guide the investing public, while Seplat Energies update the market on its recent acquisition and expected impact. Wapco notified NGX of its closed period. As Cutix informed the market of insiders dealing.
Money flow and other momentum tools were mixed, presenting buy opportunities for bargain hunters who understand the importance of buying low and selling high in any market condition in the midst ongoing volatility. Despite, the selling sentiment in the midst of expected retracement from support level of 98,022.49 basis points and 98,033.94ps to rebound, thereby creating the perfect setup for high probability of reversal or continuation to catch end of year repositioning at the right price. Also, as the index still trade 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 consolidating phase in the midst of recovery and oscillation, as candlestick formation and momentum indicators reveal a somewhat strength and weakness in the market. As ADX is looking down to read 25.85 points, while RSI and Money Flow Index were down at 54.57 and 52.00 points against the previous session’s 56.27 and 52.69 points respectively. Consequently, market players should watch this current trend and trade wisely in the face of funds leaving the market on a selling 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 on Monday inched up to continue its oscillation, trading at $71.67 per barrel in the midst of weak global demand and rising US inventory. As OPEC extend production cut 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, Monday’s trading opened slightly in the green before pulling back to oscillate for the rest of the session on profit taking and selloffs in some mid and large cap stocks. Despite buying interest in other stocks. This situation pushed the NGX’s index to an intra-day low of 98,033.74bps from its highs of 98,262.43bps, before closing below its opening level at 98.107.52bps.
Market technicals were weak and mixed with lower volume when compared to the previous session in the midst of breadth favoring the bears on a selling sentiment as revealed by Investdata’s Sentiments Report showing 32% buy position and 68% sell volume. The total transaction volume index stood at 0.83 points, just as energy behind the day’s performance was relatively strong as Money Flow Index inched down to read 52.00pts, from the previous day’s 52.69pts, indicating that funds left the market.
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Index and Market Caps
The NGX All-Share Index at the end of Monday’s trading shed 103.23 basis points, closing at 98,107.52bps from 98,210.75bps, representing a 0.11% drop, while market capitalization fell by N62.58.bn, at N59.47tr from the previous day’s N59.53tr, representing a 0.11% value loss.
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The downturn was driven by selloffs and profit booking in the shares of Wapco, Fidelity Bank, Oando, Accesscorp, UBA, FCMB, Transcorp, Wema Bank, NB and Ucap, among others. This impacted negatively on Year-To-Date gain as it inched down to 31.21%, while Market capitalization gain stood at N15.12tr, representing 45.35% growth over its opening level for the year.
Mixed Sector Indices
Sectoral performance indexes were mixed, as NGX Energy and Consumer goods index closed higher by 0.44% and 0.02% respectively, while NGX Insurance index led the decliners after losing 1.22% followed by Industrial goods and Banking with 0.53% and 0.11% respectively.
Market breadth was negative, as losers outnumbered gainers in the ratio of 36:18, while transactions in volume and value were down after investors exchanged 436.03m shares worth N12.86bn. Volume was driven by trades in FCMB, Accesscorp, UBA, GTCO and Fidelity Bank.
NGXGroup and Golden Breweries were the best performing stocks, gaining 10% each, closing at N27.50 and N5.94 per share respectively on the back of sentiment and market forces respectively. On the flip side, NSLTech and Guinea Insurance lost 10% and 8.93% respectively, closing at N0.63 and N0.51per share, purely on profit taking and selloffs.
Market Outlook
We expect volatility to continue as bargain hunters takes advantage of pullbacks, while rebalancing their portfolios midst of 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
