It was a mixed trading session that started trading on the Nigerian Exchange for the month of February on Thursday. The session closed on a positive note after two successive days of profit taking and portfolio realignment by fund managers that weighed on stock prices in the midst of corporate earnings releases, and high volatility ahead of the dividend season. Activities in the fixed income market and rising inflation ahead of policy meeting will further determine market direction in the coming days.

The NGX rebounded as recent pullbacks created new buy opportunities for smart traders and discerning investors as quarterly and unaudited full year 2023 financials continues to give insights into what market players should expect from these companies between now and March 31, 2024. Companies that opted not to release unaudited Q4 2023 are expected to file their audited full-year results with corporate action for these recommending dividend to shareholders.

On this note, all eyes are on early filers like United Capital, Africa Prudential, MTNN, Nigerian Breweries, Zenith Bank, GTCO, UBA and others, especially now that some of the bank directors have approved their audited accounts and sent to the Central Bank of Nigeria (CBN) for final approval before making it available through the NGX. As the market enters the peak of the earnings reporting season where sentiments and earnings fundamentals drive momentum and liquidity level as players react to the numbers being provided. These results are expectedly impressive or disappointing, depending on where the pendulum swings. This will drive oscillation and volatility as dividend announcements and corporate actions pour in this month.

The benchmark NGX All-Share index closed higher to halt two consecutive sessions of back to back loses on a high traded volume and positive market breadth due to rekindled buying interests in banking stocks and others that pushed the market above 102,000 psychological line in the midst of volatility and portfolio rebalancing  for dividend income and capital gains.  Already, the market is looking forward to the big names, and particularly more banks and blue-chip that have this month to release their scorecards, just as the numbers released so far have given more insights into market valuation and fundamental analysis as prices continue oscillating.

Position taking resumed in the midst of expectation of more corporate earnings, as sector rotation persists in the face of pullbacks. Market players should watch out for the value, areas of resistances and supports levels ahead of these companies’ results hitting the market any moment from now. The NGX has displayed a mixed picture as market players eagerly await numbers from the companies, following the optimism that was fueled by the belief that the financial sector’s impressive performance and growth prospect of the economy. This is amid the rising macroeconomic headwinds that will support rebound and revaluation of assets in 2024.

With stock market being a leading economic indicator, all eyes are still on the fiscal and monetary authorities for a clear direction of where the economy is heading, given developments in the global economy, especially the sustained geopolitical tensions in the Middle East and Eastern Europe. There is also the fear of a recession, among other issues that will continue to influence investment decisions, while driving volatility. The NGX index’s action remains above the T-line, on daily basis in the midst of high volatility and positive momentum to trade above the short and long term Moving Averages on the daily, weekly and monthly time frame. Portfolio rebalancing on the exchange continued in the face of earnings season and volatility, just as Jaiz Bank notified the market of its board meeting and closed period, while Africa Prudential announced its leadership, with appointment of a new Managing Director.

The candlestick formation and chart pattern on Thursday revealed buying sentiment that may likely continue or reverse, depending on market forces and sentiments as trading opens this morning. Therefore, market players should target companies with consistent track records of dividend payment, strong fundamentals and growth prospects that will support further growth in earnings which price feeds on in any market cycle. Technically, the index’s action is still at overbought state with bearish money flow divergent which is a topping chart pattern that signal reversal also.

On the strength behind the trend or the session momentum indicators were mixed, at this overbought state of the market, as ADX slowdown to read 83.51, while RSI and Money Flow Index are looking different direction 82.12 and 84.49 points against the previous session 80.60 and 92.51 points respectively. This should be of concern to investors and smart traders as they trade with caution because funds are leaving the market. The trading volume pattern suggests a “hold and watch disposition” by market players, as investors accumulate more positions in some stocks. It’s no longer news that returns from others investment windows remain below inflation and therefore negative.  Also, the anticipated financial market and economic reset in 2024, comes with huge opportunities to create wealth for smart investors and traders.

To navigate the rest of the quarter profitably using fundamental and technical analysis to run, join investdata live sessions at noon every Monday, Wednesday and Friday trading day “and also get investdata technical toolbox to play the current state of the market do suggest that discerning investors are gradually becoming greedy, while others are fearful, as seen in the recent range market. Despite the oscillating volume of transaction witnessed in recent time, it is time to go shopping for undervalued stocks, sectors and the next insider playing opportunity.”

Oil price rebounded on Tuesday, to continue it oscillation as trades at $82.87 per barrel in the midst of IMF projecting global growth in 2024 and recent attack on US forces as conflicts in the Middle East and Ukraine persists.  The rising geopolitical tension across the globe is also a major threat to many economies. Also, oil supply increase by OPEC and others impact oil price as it continued to oscillate. This trend may likely continue in 2024, this up and down movement of oil price also continues to drive volatility.

Meanwhile, Thursday’s trading opened in the downside before rebounding in the afternoon and oscillated for the rest of the session on buying interests in low, medium and large cap companies, while there were selloffs in some stocks.  This pushed the NGX’s index to an intraday high of 102,818.73 basis points, from its lows of 100,573.42bps, before closing above its opening figure at 102,802.25bps.

Market technicals were positive and mixed, as transaction volume was higher compared to the previous session in the midst of breadth favoring the bulls on a buying sentiment as revealed by Investdata’s Sentiments Report showing 99% buy position and 1% sell volume. The total transaction volume index stood at 1.10points, just as momentum behind the day’s performance was strong as Money Flow Index looking down at 84.49pts, from the previous day’s  92.51pts, indicating that funds left the market, despite closing in the green.

For you to successfully invest and trade in this volatile market in 2024, order for Investdata’s video on Buy & Sell Technical Analysis Toolbox to navigate the volatile market profitably, enhance trading decisions and boost your bottom line. Also, to up your game in stock trading and investing, understanding the key to trading price and index action will go a long way to make the difference in your trading results, check out the video materials below.

Index and Market Caps

The key performance NGXASI, at the close of the day trading gained 1,647.79 basis points to close at 102,802.25 after opening at 101,154bps, representing a 1.63% growth, just as market capitalization rose by N902bn, closing at N56.26tr from the previous day’s N55.36tr, which also represented a 1.63%  appreciation in value.

Attention: If you have not signed up for INVESTDATA’s buy and sell signal setup, don’t delay, because the number of stocks entering their overbought range has just increased to 60 as they rallied to new highs that call for caution and positive chart patterns to be on our watchlist. These stocks have potentials to retrace, considering their earnings prospects and the oscillating moves in an upmarket and weak economy.

To become a member, send ‘YES’ or ‘STOCKS’ to the phone numbers below. Take advantage of this service to buy right and sell right at the current oscillating market in the midst of earnings season, portfolio reshuffling, and repositioning as we await an economic reform policy that can stimulate and re-track the economy to the path of growth and development.

The upturn was driven by accumulation in the shares of GTCO, Accesscorp, Transcorp, Cadbury, UBA, FBNH, Wapco, Zenith Bank, Mansard, BUA Foods Dangote Sugar, Nascon and Oando, among others, which impacted positively on Year-To-Date gain of 37.48%. Market capitalization YTD gain stood at N15.46tr, representing 37.49% above its opening level for the year.

Bullish Sector Indices

The sectoral performance indexes for the session were in green, led by the NGX Banking after recording 7.82% up, followed by Consumer goods, Insurance,  Industrial goods and Energy  with 4.37%, 2.18%, 0.35% and 0.02% respectively.

Market breadth turned positive  as gainers  outnumbered losers in the ratio of 52:17, as transactions in volume and value were mixed, after players exchanged 861.01m shares worth N12.16bn. Volume was driven by trades in, Universal Insurance, Transcorp, Zenith Bank, UBA and Veritas Kapital.

GTCO and Chams were the best performing stocks, gaining 10% each, closing at N40.70 and N2.64 per share respectively on earnings expectation and market sentiments.  On the flip side, Deap Capital and CWG lost 9.88% and 9.87% respectively, closing at N0.73 and N6.85per share, purely on profit taking and selloffs.

Market Outlook

We expect mixed sentiments and profit taking  to continue on bargain hunting and  reactions to earnings reports, as  market players digest these numbers  in the face of  volatility and coming MPC meeting, while pullback at this point will add more strength to upside potential. As such, 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

Tel: 08028164085, 08179547605