Market Update for March 7
The seesaw movement resurfaced on the Nigerian Exchange on Tuesday as profit taking and portfolio repositioning continued after highly capitalized stocks released their 2022 full-year audited accounts to the market in expectation of first tier banks earnings reports and others that had earlier made their unaudited results available before now. These earnings and corporate actions did not impact much on the companies’ share prices due to the fact that traders had earlier priced in these numbers before it was released and uptick in the last Treasury Bills primary auction rates as all eyes are on today’s offers with Central Bank of Nigeria (CBN) planning to raise trillions in this second quarter 2023.
The dividend yields for companies that released their scorecards so far beat the prevailing money market yields, considering time and tenor, as income investors continue to position for dividends ahead of more releases from listed companies yet to provide their numbers.
The flattish close of the market on Tuesday as revealed by the NGX All-Share index indicates that buyers are still positioning in some stocks despite sellers dominating trading on selloffs’ mood and mixed sentiments in the midst of a less than average traded volume and negative market breadth. This has consequently extended the sideways movement to form a hammer candlestick that signal reversal, which need to be confirm as trading opens at the midweek.
Already, many companies have notified the investing public of their board meetings to approve audited result and recommend dividend for the period, after the unaudited accounts have given investors an insight into what will likely be released as dividend, following which such results should hit the market any moment before the month end.
With the election season gradually winding down, it is expected that political uncertainties and fear will reduce, since the continuity that supports investment inflow is being built in the midst of an earnings reporting season, so traders and investors will continue to play the market waiting for the release of more results, a situation likely to drive equity prices. Also, it is expected that dividend adjustments and other corporate actions will support volatility that will create new entrance for market players, especially traders in the post dividend adjustment period which is expected to support positive trend in Q2 all things being equal.
The NGX All-Share index remains on the sideways movement heading for the 56,000 basis points mark, while trading slightly above the T line after testing it on a strong momentum, amid repositioning in some companies and sectors expected to declare dividends between now and March 31, 2023. The actual state of these audited financials will give a clear direction, just as it may support the continuation of this recovery in the new month, notwithstanding uncertainties associated with the 2023 general elections.
Technically, the NGX index’s action is on a distribution phase which may support pullback or uptrend, after forming a cup and handle chart patterns that signal a reversal or continuation of trend on a daily and weekly time frame. This signal bearish divergence between the index action and MACD on a dally chart that supports correction. Let us keep our gaze on market forces and money flow which is looking flat.
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Oil price oscillation continued, as it pulled back to trade at $83.38per barrel, even as analyst’s projects higher prices on increasing global demand is set outpace supply, as China economic recovery continue in the midst of rate hike by the Feds. Also, the attack on Ukraine is rising even when China is calling for peace and a ceasefire. This geopolitical tension, the prevailing high interest rate regime and soaring inflation across the globe remain potent threat to world peace. Also, supply tightened due to the Russia-Ukraine war that entered into it is first year last week. The up and down movement of oil price also continues to drive volatility across markets.
Tuesday’s trading started on the upside but fell to oscillate throughout the session on buying interest in highly priced stocks and profit taking in banking stocks and other companies, a situation that pushed the NGXASI to an intraday low of 55,522.41 basis points from its highs of 55,723.29bps, before closing slightly below its opening figure at 55,603.94bps.
Market technicals were negative and mixed with higher volume of trade, compared to the previous session in the midst of breadth favoring bears on a buying sentiment as revealed by Investdata’s Sentiments Report showing 81% buy position and 19% sell volume. The total transaction volume index stood at 0.61 points, just as impetus behind the day’s performance was relatively strong going by Money Flow Index at 60.355pts, from the previous day’s 67.05pts, indicating that funds left the market.
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Index and Market Caps
The benchmark NGXASI at the close of Tuesday’s trading fell by just 1.63 basis points, closing at 55,603.94bps, after opening at 55,605.57bps, representing a 0.003% drop, just as market capitalization fell by N89 million to N30.29tr, from the previous day’s N30.29tr, which also represented a 0.003% value loss.
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Meanwhile, Tuesday’s downturn was driven by profit taking in the share of MRS Oil, NCR, Honeywell, Cutix, Multiverse and FTN Cocoa among others, which impacted mildly on Year-To-Date gain to 8.49%. Market capitalization YTD gain increased by N2.58tr, representing 8.50% above its opening level for the year.
Mixed Sector Indices
Sectorial performance were mixed on Tuesday, as the NGX Insurance and Industrial Goods closed 0.48% and 0.33% higher respectively, while the NGX Banking led the decliners, shedding 1.03%, followed by Energy and Consumer goods with 0.42% and 0.05% respectively.
Market breadth was negative with losers outnumbered gainers in the ratio of 22:10, while transactions in volume and value were up after stockbrokers executed 159.46m shares worth N2.48bn. Volume was driven by trades in Transcorp, Zenith Bank, GTCO, UBA and Fidelity Bank.
Caverton and UACN were the best performing stocks, gaining 9.62% and 7.60% respectively, closing at N1.14 and N9.20 per share respectively on market forces. On the flip side, MRS Oil and NCR lost 10% and 9.88% respectively, closing at N31.05 and N2.92per share, purely on profit taking and selloffs.
Market Outlook
We expect mixed sentiments and trend to continue as investors react to dividend and position for the expected more financials. Market players target dividend paying companies and defensive stocks to protect their portfolios ahead of the governorship election and post dividend adjustment. Any pullback at this point may add more strength to upside potentials. As such, investors should take advantage of price correction. Also looking at the trends and events across the globe and domestically.
Q2 2023 Investdata Master Class
Theme: Post-Election Investment Opportunities For Consistent Profits In 2023
Sub-Topics
1. Nigeria: Post-Election Investment Opportunities In Sectors/Industries, Mr Abiola Rasaq, Head Corporate Strategy at CSCS Plc
2. Managing Trade & Investment Risks In A Post-Election Year Using Technical Analysis Tools, Mr Abdul-Rasheed Oshoma Momoh, Head Capital Market at, TRW Stockbrokers Ltd
3. How To Prepare Ahead Of Policy Shifts By Incoming Administration, Alhaji Garba Kurfi MD/CEO APT Securities & Funds Ltd
4. Identifying Changing Post-Election Trends/Patterns For Enhanced Trading Returns, , Mr Ambrose Omordion, CRO. Investdata Consulting Ltd.
This volatile market is not going away any time soon. We have not seen many times like this, since our democratic government started in 1999, especially as the general elections and the post-COVID 19 era have changed the market’s holding structure with domestic investors taking the lead, a situation that has supported today’s trends and patterns. So it is more important than ever to have the best tools and knowledge to benefit most out of this cycle, as the post-election environment once again creates opportunities for money-making moves. That is why I am excited to share something New and Unique in the Q2 Master Class.
Expected Takeaways From This Q2 Master Class
A. Discover how successful traders and investors know the likely market trend and direction
B. Learn how technical traders catch market turns and Ride the waves in days or weeks
C. How following Trends and Patterns can boost your trading returns
D. Simple and effective short-term trading strategy you can implement in minutes’ daily
E. How to quickly identify the best trades and investment opportunities to win 80% of the time
F. The power of economic reforms and technology that drive sector/industry growth
G. What can make a pro like you start thinking and trading with confidence
H. 5 Stocks to beat inflation in 2023
“Q2 Master Class 2023 connects you to post-election trade opportunities and ideas to enhance your trading profits
Don’t miss this session, if you have any exposure to the stock market, either directly or indirectly via managed funds of any kind……
Date: April 1, 2023
Time: 9am
Fee: N50,000
Venue: Zoom
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Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
Tel: 08028164085, 08179547605
