Market Update for November 22
Nigeria’s stock market ended trading at the midweek on a flat note, with marginal gain and weak technicals, as market players continue to weigh the expected impact of positive macro-economic data over the recent downgrade by Moody’s and MSCI Index rebalance on the market performance as the year draws to a close, and in view of the end of the year Santa Claus rally and other seasonal changes, this is especially given that the market and economy remain on the path of recovery, given the seeming slower than expected growth pace of the Q3 GDP released on Monday.
The market’s composite index opened the day green and started moving up and down by the mid-morning, rallying at midday to a high of 36,693.59 before the downward pull by profit taking activities. It failed to break down the recent support at 36,563.43 points. This was until the last hour when a 5-wave advance slightly took formation from a double bottom chart pattern that supports uptrend and recovery, which was not strong enough to make meaningful impact. Thursday’s market sentiment and direction will however confirm it.
The selling pressure in the market remain relatively high at 65% on negative breadth with improved volume as revealed by the volume index of 0.88 and buying position at 35% of the total transactions of the day to reverse the previous day’s bear market in search of direction. all the sectorial indexes were in green, except the NSE Pension that closed in red, while Nestle Nigeria’s share price hit another all-time high at N1,300 on the strength of its impressive third quarter earnings report and positive market sentiment on its consistent dividend payout, irrespective of the yield and its shareholding structure that had always supported the price.
Meanwhile, All Share Index for the day gained slightly 8.69 basis points to close at 36,608.76 from the 36,600.07 points it opened, which represented a 0.02% growth, just as market capitalisation was up by N7.29bn to close at N12.75tr from the previous N12.74tr, representing a 0.02% marginal appreciation.
The seeming upturn resulted from value gain by medium and high cap stocks like Nestle, Zenith Bank, Unilever, Dangote Sugar and International Brewery, as investors and traders took position ahead of year-end rally, a situation that helped the ASI’s year-to-date return to 36.22%, just as YTD growth in market capitalisation stood at N3.5tr, representing a 37.88% rise over the year’s opening value.
Market breadth for the day was negative as the number of decliners outnumbered advancers in the ratio of 23:17 on a high traded volume that was higher than previous day level.
Market activities in terms of volume and value were up by 28.42% and 68.99% respectively to 331.24m shares valued at N5.56bn from previous day’s 257.93m units worth N3.29bn.
At the end of Wednesday’s session also, Unilever topped the advancers’ table, gaining 5.69% to close at N39.95 per share, on the strength of its improving fundamentals and it retention on the MSCI index. It was followed by Nestle, which notched 3.08% to close at N1300 as investors react to its interim dividend of N15 and based on its improved earnings.
On the flipside, GSK shed a further 9.70% to close at N22.80 each on market forces and profit taking, ahead of Flour Mills which lost 4.98% to close at N31.5 each also, on profit taking.
As market opens, expect volatility to continue as interpretation of the recent positive economic data like inflation, Q3 GDP and retention of MPR at 14% continues, in the midst of profit booking, portfolio rebalancing and repositioning ahead of the year-end rally as commodity price of oil in the international market remain relatively high to boost the nation reserve.
Again, we advise that investors allow numbers to guide their decisions while repositioning for the rest of the year’s trading activities, especially now that stock prices remain volatile amidst improving company, economic and market fundamentals.
It is time to combine fundamentals and technical tools to take decision by knowing the support and resistant level to reposition or exit any position. Market is in phases know the cycles in order to manage your trading and investing risk. For stocks that should be on your shopping list to buy in this seasonality changes as the year winds down, sign up to INVESTDATA BUY AND SELL signal setup by calling 08032055467.
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