Market Update for the Week Ended March 24 and Outlook for March 27-31
The tension arising from Nigeria’s interest rates and yields continue to drive volatility on its equities market over the past week, amidst the high inflation, slowing economic activities and delay in the release of audited earnings reports by the first tier banks. These have continued to dampen positive sentiment and market momentum among investors, even when more companies are expected to make available their numbers ahead of the March 31, 2023 official deadline for submission of 2022 audited financials.
With the electoral season over and despite protests by other parties and their candidates who have challenged the outcome legally, attention has shifted away from the pre-election uncertainties to corporate earnings and actions. This is expected at a time many quoted companies are yet to release their numbers which would have shaped the market direction. Already, the NGX has witnessed profit taking or selloffs in recent weeks, even as yield outlook remains mixed in the fixed income market.
The ongoing volatility and mixed trends are likely to continue due to price adjustments for dividends, profit taking and reactions to expected earnings reports, after most listed companies notified the exchange of board meetings to approve their 2022 financial and dividend recommendation. Last week, pharmaceutical giants- Fidson Healthcare and May & Baker joined the category of companies that have submitted their audited financials for the 2022 full-year ended December 31. Although the numbers were generally impressive, the 55 kobo and 30 kobo dividend respectively fell below market expectations.
With the relative peace in the system today, the expectation of changes in the nation’s economic managers and policy shifts that would drive positive economic growth and development needed to impact market and sectoral performance, going into the future. It is noteworthy that the NGX’s Price-to-Earnings ratio remains relatively low and attractive for investments, following which we foresee a positive trend in the market from Q2 and beyond.
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Oil price during the week continued its oscillation, to hit 15 months’ low, despite the seeming rebound to trade at $74.99 per barrel after testing low of $70 on fear of rate hike, recession and mixed outlook of China economic recovery. We note also the geopolitical tensions and supply disruption due to the Russia-Ukraine war which has lingered for more than a year and escalating. The up and down movement of oil price also continues to drive volatility across the globe.
Movement Of NGXASI
The NGX during the week recorded a mixed trend of negative outing, with three sessions of down market and two up days, owing to profit taking, selloffs and price markdown for dividend recommended by board of directors. This pushed the index action slightly on a mixed sentiment, ahead of more corporate actions that now make the market attractive for dividend investors.
Trading for the week opened on a positive note, halting the gain recorded in the previous session as index lost 0.09%, a trend that reversed on Tuesday with a gain of 0.03%, this was sustained at the midweek when the index inched up by 0.06%. The situation changed on Thursday as the market pulled back by 0.02%, and was extended to Friday with the index further pulling back by 0.02%, bringing the week’s total loss to 0.04%, in addition to the previous week’s 1.58% negative position.
Consequently, the key performance NGX All-Share Index slipped down by 22.86 basis points, closing at 54,892.53bps, compared to the week’s 54,915.39 points opening level, after touching an intra-week low of 54,314.52bps, from its highs of 54,997.28points. Similarly, market capitalisation fell by N13bn, also representing a 0.04% value loss at N29.90tr, from the previous week’s N29.92tr,
Top gainers chart for the week was dominated by low, medium and high cap stocks amid profit booking and buying sentiment in dividend paying companies as volatility and portfolio repositioning continued. Also notable is the fact that market players were accumulating positions after seeing the unaudited results from different sectors ahead of their corporate actions. So buying into value, strong earnings and high dividend yield companies continued, as the market’s recovery persisted, heading for 55,000 and 55,109.85 levels again.
Market technicals revealed a slight breadth as gainers outnumbered losers in the ratio of 28:27 on a buying sentiment as indicated by investdata sentiment report showing 85% ‘buy’ volume and 15% sell position. Money Flow Index looking down to read 76.15bps, from the previous week’s 85.36points, an indication that funds left the market on a weekly chart to reflect selloffs and profit booking in some stocks and major sectors of the market, in the face of 50 basis point rate hike and uptick in fixed income market yields.
The NGX index’s action pulled back to breakdown the trend line, testing the T line on a very high traded volume to formed a candlestick hammer or a bullish doji start that supports an uptrend, which need to be confirm in the new week as more financials are expected in the market, despite profit taking experienced last week.
Despite the seeming selloffs, position taking remained dominant as the index traded above the T-line and other moving averages like 50, and 100, even forming a topping chart at different levels of its recovery move from 43,418.26 that signaled reversal or continuation of trend. This depends on market forces as all eyes are on more 2022 financials that will give direction as trading opens on Monday. We note that the volume which supported this recovery and rally remains mixed and above the market’s traded average, just as corporate actions and others could support reversal at this level.
Mixed Sectoral Indices
The sectorial performance indexes for the week were mixed, with the NGX Banking closing 0.93% higher, while the NGX Consumer Goods led the decliners’ after losing 0.74%, followed by Insurance with 0.53%. Just as NGX Energy and Industrial goods closed flat.
Transactions in volume and value were mixed, as market players executed 1.69bn shares worth N11.06bn, compared to the previous week’s 853.75 million units valued at N11.84bn. Volume was driven by Healthcare industry, Financial Services and Conglomerates boosted by trading Neimeth Pharm, Transcorp, UBA, GTCO and Fidelity Bank.
Sunu Assurance and Lasaco Assurance were the best-performing stocks for the week, gaining 9.09% and 7.14% respectively, closing at N0.48 and N1.05per share on market forces. On the flip side, NCR and Ikeja Hotel had 18.69%and 18.25% respectively, at N2.35 and N1.03 per share, purely on profit taking and selloffs.
Outlook for the week
Despite the mixed sentiments last week, the candlestick formation for the week signal reversal that supports an uptrend, depending on market forces in the midst of price adjustment and earnings expectations, just as market players await incoming government agenda and policies The market index is already eyeing the 55,000 psychological level in weeks to come. However, retracement to the 53,578.12 level and below is possible on profit taking as global and domestic events unfold.
Q2 2023 Investdata Master Class
Theme: Post-Election Investment Opportunities For Consistent Profits In 2023
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
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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
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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
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CRO|Investdata Consulting Ltd
Tel: 08028164085, 08179547605