Expect Improve Sentiments, Of Thursday’s Deadline For 2021 Accounts, Q1 Window Dressing

Market Update for the Week Ended March 25 and Outlook for Mar 28-April 1

Trading activities on the Nigerian Exchange in the past week extended its negative sentiment at the peak of the earnings reporting season to enter the declining phase of the market cycle as sellers dominated trading on panic selling as the back of the ongoing war between Ukraine and Russia. The war has lasted over one month despite the bouquet of sanctions imposed on the aggressor- Russia, with the US striking a gas deal with the European Union to help wean the continent off Russian energy dependence. Also, central banks across the world continue to hike rates to checkmate the rising inflation, with inflation in matured economies already hitting new highs, thereby changing the global economy direction and expectations for 2022, even while COVID-19 remains potent.

The trading environment and conditions in the domestic market have changed on a low traded volume and mixed sentiments, suggesting that some investors are still taking profit in high cap stocks and blue-chips. This is amidst reactions to the audited full-year 2021 earnings reports remain mixed and below expectation despite the impressive numbers and high payouts of quoted companies that had submitted their financials. Meanwhile, this continued volatility may not be unexpected given the high level uncertainty and risks associated with pre-election years. Investors at this point are expected to change their investing strategies, considering the decision of members at the last Monetary Policy Commission meeting to hold all key monetary rates unchanged, so as not to deflate the mild recovery already noticed in the economy, amid the rising inflation and high cost of production due to high cost of energy related products likely to showdown the nation’s industrial productivity.

In all these, companies with strong fundamentals and growth prospects are going to outperform this market, despite the unstable market and economy in the days leading to the onset of the 2023 general election next February.

The recent pullbacks witnessed in the market requires proper technical analysis tools for timing your trades to avoid exposing your funds to avoidable risks. Your investment time frame should determine the multiple time frame or chart you deploy when charting to take a decision. Buying into strong group of stocks and sectors at the right time makes the difference in your portfolio and helps you to build wealth consistently in any market situation. This is the reason, you must not miss out at the coming Q2 Master Class next Saturday April 2, 2022, at this event 5 hot value and growth stocks with defensive qualities to play in this current market environment. These are huge buy opportunities. 

The trading strategies that will help you to navigate this current market trend include: Learning and understanding how to use specific technical analysis tools. Investdata Technical Tool Box makes it easier for you to understand and use them effectively to enhance your trading results and bottom-line. Try and get them, if you have not made an order.

Despite, the pullbacks witnessed during the week, the share prices of PZ Cussons, and NPF Microfinance, among others, hit new 52-week highs, as investors reacted to the strong numbers from one of the country’s oldest conglomerates.

Movement Of NGXASI

It was another bearish week on the NGX, as index action recorded three trading sessions of down market and two up days, thereby extending the negative outing for two consecutive weeks, after opening the week on a negative note, losing 0.05%, which was extension of previous Friday’s selloffs that lasted until Tuesday when the index fell by another 0.20%. The trend was halted at the midweek when the market gained 0.02% on renewed buying interests, but was short lived on Thursday as the NGX All-Share index lost 0.43% to breakdown the strong support and psychological line of 47,000 that ushered in the decline phase of the market after more than one month in a consolidation level, which was at the same time a distribution phase as high cap stocks suffered losses. However, the market tried to rebound on Friday, with the index closing flat at 0.01%.  This brought the week’s total loss to 0.67%, compared to the previous week’s decline of 0.33%.

Specifically, the benchmark index recorded a 318.44 basis points loss, closing the week at 46,964.23bps, after touching an intra-week low of 46,931.38 points, and a high of 47,364.46bps. Recall that the week opened with the index at 47,282.67bps, just as market capitalisation fell by N172bn, closing at N25.31tr, from the previous week’s N25.48tr, which also represented a 0.67% depreciation in value.

Despite the pullback during week, low cap stocks dominated the top advancers table, as market news and dividend expectations continued to drive demand for some stocks, as players took advantage of the ongoing corrections to buy into the better-than-expected numbers that had hit the market.

We note that economic data and corporate earnings released during the week did not impact the NGX index, with more selling activities than buying, a situation that was reflected in major sectoral indexes which closed lower. This followed the losses suffered by MTN Nigeria, Nestle, GTCO, FBNH, ETI and others, dragging the market down on a low traded volume.

Market breadth for the week turned negative due to profit-taking and selloffs ahead of more corporate actions and end of the quarter window dressing activity by fund managers and other. This is likely to support the recovery in the short to long-run, while investors increased their positions in the hope of higher dividend payouts and yields.

During the week, losers outnumbered gainers in the ratio of 44:24 on selling sentiments, as revealed by the investor sentiment report showing 8% ‘buy’ volume and 92% sell position. Money Flow Index, however, declined to 63.55bps from the previous week’s 68.89 points, an indication that funds left the market.   

NGX’s index action remains relatively strong on a weekly time frame, despite pulling back in two trading weeks on a selling sentiment to trade below seven-day moving average and 47,000 points to test the 46,931.38 basis points. The candlestick formation, at the end of the week showed that sellers are in charge at a time the release of more 2021 audited financials is expected in the market to give a direction. The candlestick pattern indicates a possible continuation of the trend, depending on market forces in the new week. Meanwhile, market recovery is still strong. Also, all eyes are on the fixed income market yields and oil prices to further support market fundamentals and attract liquidity to the equity space. The NGX at this point is creating new buying opportunities for dividend income investors.

Bearish Sectoral Indices

The sectorial performance indexes for the week were in red, led by the NGX Insurance after losing 1.40%, followed by Consumer Goods, Banking, Industrial and Energy with 1.10%, 0.66%, 0.02% and 0.02% respectively.

Transactions in volume and value terms were down as investors exchanged 1.18bn shares worth N16.60bn, compared to the previous week’s 2.45bn units valued at N20.65bn. This volume was driven by Financial Services, Consumer goods and Conglomerates industry stocks, Fidelity Bank, UBA, GTCO, Zenith Bank and Transcorp.

Chemical Allied Products and Fidelity Bank were the best-performing stocks for the week, gaining 10% each, closing at N19.80 and N3.30per share respectively on dividend of N2.10 and earnings expectation. On the flip side, RT Briscoe and UPDC lost 17.50% and 12% respectively, at N0.66 and N0.88 per share, purely on profit-taking and selloffs.

Outlook for the week

We expect improve sentiments in the new week, as all eyes are on deadline for submission of 2021 audited accounts, in the midst of expected more dividend announcements and end of the quarter window dressing by fund and portfolio managers. Also, investors and traders continue reacting to numbers, as revaluation of quoted companies on their earnings performance and growth prospects continue ahead of Q1 2022 numbers. We note that income investors continue buying into dividend-paying stocks,

Q2 Master Class Theme 

Trading Opportunities in A Volatile Market & Defensive Sectors In A Pre-Election Year

Sub-Topics

A. Great & Tested Strategies For Trading In Unstable Market, Alhaji  KurfiGarba MD/CEO Apt Securities & Funds Ltd

B. Technical Tools As Timing Edge To Manage Volatility Risk & Identify Buy Opportunities, Mr Abdul-Rasheed Oshoma Momoh, Head Capital Market at TRW Stockbrokers Ltd 

C. The Power of Earnings in a Post Pandemic Shift & Political Uncertainty, Mr Ambrose Omordion, Chief Research Officer, Investdata Consulting Ltd

 Take way from this master class:

1. The volatile start to the year in financial markets is set to continue for this year and beyond 2023 election.

2. Economic recovery, high inflation, a post-pandemic repricing of equity, global trend and the Ukraine-Russia war have the potential to disrupt markets

3. How to navigate through this pre-election year environment and its challenges, as market volatility and sector rotation should present good opportunities for discerning traders and investors. 

4. Simple valuation process for stock picking that combines fundamental and technical analyses for your watchlist and stock picks.

5. Hot stocks to deliver 2-time inflation rate returns and gains in 91 days

Don’t miss this ultimate source of knowledge about the market, if you desire financial independence through profitable trading, investing and wealth building in this 2022 and beyond.

Date: April 2, 2022

Time: 9.am – 4pm

Venue: ZOOM

Fee: 50K

Discerning investors and traders know that highly volatile markets create exceptional opportunities, while novice and amateur traders can often have a different response to volatility, which leads FEAR.

Fear is the root cause of so many costly trading behaviors…hesitation to pull the trigger, incorrect position sizing, chasing trend and, market wave as a result of lack of trading plan and objective. If you want to be on the list of successful investors and traders in Q2 2022, send STOCK to 08028164085, 08179547605 now.

Meanwhile, the home study packs on Comprehensive Stock Market trading course video, Stock Market Analysis Beyond Fundamental & Technical Analysis, 2022 Actionable Trading Plan and Opportunities in Q1,  INVEST 2022 Traders & Investors Summit materials and 10 Golden Stocks for 2022, Strategies and How to invest profitably in this Changing Market Dynamics/ Recession, Mastering Earnings Season For Profitable Investing and Trading in any market situation/ cycles, Life Beyond COVID 19 Investment Opportunities In The Stock Market are now available. To obtain your pack send ‘Yes’ or ‘Stock’ to 08028164085, 08179547605 now.

Ambrose Omordion

CRO|Investdata Consulting Ltd

info@investdata.com.ng

ambrose.o@investdataonline.com

ambroseconsultants@yahoo.com

Tel: 08028164085, 08179547605

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