Expect Mixed Sentiments, Portfolio Realignment Ahead Of New Govt Take Off, As All Eyes MPC Outcome

Market Update for the Week Ended May 19 and Outlook for May 22-26

It was a flattish week of mixed performance and positive momentum on the Nigerian bourse, driven by the increased momentum of insiders dealing as company directors and sundry related parties consolidate their holds on the companies in crossed deals leading to a significant boost in transaction volume as evident in the market recently.
Also, the volume pattern on the Nigerian Exchange in recent weeks and month indicates a gradual return of confidence and liquidity into the equity space, especially in the financial market. Another driving force is the Q1 corporate earnings inflow, most of which beat market expectations due to the cash crunch experienced during the period, and uncertainties during the general elections.
Company performances in the first three months of 2023 surpassed the rate of inflation, thereby given investors a window for hedging against inflation ahead of new administration, even when MPC meeting is around the corner.
The outcomes of these data and events are likely to boost confidence, especially if the nation’s Q1 GDP sustains growth even if fragile and the benchmark Monetary Policy Rate is left unchanged to allow the incoming government settle down. The increasing bargain hunting in the midst of price adjustments dividend payments are expected to enhance market recovery.
Technically, the low price attraction as a result of dividend adjustments should attract inflow of more funds into the equity space in the short to medium term on the back of expected confidence boost from the incoming government and economic resilience in the face of increasing headwinds.
During the week there were a lot of insider dealing notifications from UBA, Zenith Bank, Transcorp, McNichols, Ucap, Accesscorp and others, which suggests that these members of top management and board are seeing inherent value in their companies hence their repositioning, which should guide investors and traders as they watch the market and take investment decisions.
In this same period, Seplat Energy presented its interim dividend corporate action for the period ended March 31, 2023, offering a dividend of 3 cents per share, while the share prices of Fidelity Bank, Nahco, Seplat Energy, May & Baker Nigeria were adjusted for dividend recommended by their directors. Portfolio rebalancing and mixed sentiment continue to reflect on the market breadth for the period, as the share prices of more companies were adjusted for dividend recommended.
Selloffs and profit taking were seen among highly priced stocks like Airtel Africa and other blue chip companies that weighed on the market. The NGX’s Price-to-Earnings ratio remains relatively low and attractive for investments, following which we foresee a mixed trend in the rest of Q2 and beyond. Expecting the incoming government to boost confidence with right polices and appointment of economic managers.
To navigate Q2 market volatility and the rest of the year mixed outlook profitably using fundamental and technical analysis to run, join investdata live sessions at noon every 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 market correction. As volume of transaction witnessed within the week remain above the average traded volume, it is time to go shopping for undervalued stocks, sectors and the next insider playing opportunity.
Oil price during the week continued its oscillation, and rebounded to trade at $75.58 per barrel on debt ceiling resolved underway, in the midst of global mixed macroeconomic reports and rising geopolitical tensions across the globe and supply disruptions due to the Russia-Ukraine war that has lingered for more than a year now, and is indeed escalating. The up and down movement of oil prices also continues to drive volatility across different investment windows.

Movement Of NGXASI
The benchmark NGX All Share index had a mixed performance for the week, recording four days of up market and one of selloffs in Airtel, which extended the bear run for two consecutive weeks on a very high traded volume and ranging market.
The NGX extended its consolidation period on the daily and weekly charts, despite the profit taking and reactions to Q1 numbers and high dividend yields, alongside buy opportunities presented by the undervalued state of the market. This supported market recovery in the midst the NGX index sliding lower on a mixed sentiment, ahead of more March year and quarter-end accounts earnings release and other factors that now make the market attractive for technical traders as they keep their eyes on volume, strong support and resistance levels.
The week’s trading opened on a positive note, extending the gains recorded in the previous session as All-Share index inching 0.03% up. This was sustained on Tuesday and the midweek as the composite index rose 0.34% and 0.31% up respectively, before pulling back on Thursday amidst selloffs and profit taking that hit Airtel Africa, forcing the market to close 0.90% flat, but the benchmark index retraced up by 0.15% on Friday. This brought the week’s total loss to 0.05%, from the previous week’s 0.48% negative position.
In all this, the NGX All-Share Index shed 26.69 basis points, closing at 52,187.93bps from the previous week’s 52,214.62 points level. Within the period the index touched an intra-week low of 52,044.02bps, from its highs of 52,636.93bps. Similarly, market capitalisation fell by N14bn, also representing a 0.05% loss in value at N28.42tr, from the previous week’s N28.43tr,
The top advancers table for the week was dominated by low and medium cap stocks amid profit taking and mixed sentiment among the blue chip companies and undervalued stocks as volatility alongside portfolio repositioning continued. Also notable was the accumulation of positions in some stocks after seeing the audited and Q1 results from different sectors, which had revealed value in some companies with strong volume patterns. So buying into value, strong earnings and high dividend yield companies remain the way to go, as the market’s recovery and uptrend was sustained, heading for 52,384.45 and 52,586.74 levels again.
Market technicals revealed a positive breadth as gainers outnumbered losers in the ratio of 44:27 on a selling sentiment as indicated by investdata sentiment report showing 24% ‘buy’ volume and 76% sell position. Money Flow Index looking down to read 36.19bps, from the previous week’s 42.53points, an indication that funds left the market on a weekly chart to reflect selloffs in highly priced stocks and some sectors of the market, in the face of rising inflation rate and mixed outlook for fixed income market yields.
The NGX index’s action consolidated, trading above the 50 DMA and below the T line on a very high traded volume to range on a weekly time frame that supports an uptrend or pullback, which need to be confirm in the new week as pending financials are expected in the market. Also, the candlestick formation indicates that sellers are still in charge due to profit taking.
There was mixed sentiments as the NGX index traded above its 50 and 100-Day moving average, signal presence of institutional investors in the market, as accumulation is ongoing in some stocks and increasing level of liquidity on dividend payment will support continuation of uptrend. This depends on market forces as players digest financials and outcome ahead of the Monetary Policy Committee meeting that will give direction as trading opens on Monday with expectation of Q1 GDP numbers. We note that the volume which supported this recovery and uptrend remains mixed and above the market’s traded average, just as reaction to the expected results and others could support reversal or continuation at this level.

Mixed Sectoral Indices
The sectorial performance indexes for the week were mixed, as the NGX Energy and Industrial Goods closed 1.67% and 0.03% red respectively, while NGX Insurance led the advancers after gaining 5.20%, followed by Banking and Consumer goods with 2.88% and 1.86% respectively.
Transactions in volume and value were down, as investors exchanged 3.03bn shares worth N33.63bn, compared to the previous week’s 3.6bn units valued at N36.45bn. Volume was driven by Financial services, Conglomerates and Services Industry, boosted by trading Fidelity Bank, Accesscorp, Transcorp, Zenith Bank and Nahco.
FTN Cocoa and Ikeja Hotel were the best-performing stocks for the week, gaining 37.50% and 30.13% respectively, closing at N0.44 and N2.03per share on market sentiment and bonus share of 1 for 3 held. On the flip side, CWG and Ardova had lost 25.6%and 23.67% respectively, at N1.54 and N20.15 per share, purely on profit taking,

Outlook for the week
With all eyes on the outcome of the MPC meeting holding on Monday and Tuesday, we expect mixed sentiments on portfolio realignment in the midst of price adjustment and payment dates, ahead of new administration inauguration and policy agenda. However, retracement to the 51,578.12 level and below is possible on profit taking as global and domestic events unfold.

Ambrose Omordion
CRO|Investdata Consulting Ltd
Tel: 08028164085, 08179547605