Expect Sustained Bull Trend On Dividends News, Earnings Inflow
Market Update for March 9
Bargain hunters on the Nigerian Exchange took advantage of the pullbacks at the midweek to buy into the dip, thereby reversing the previous sessions’ negative outing, halting five consecutive days of losses on renewed buying interest in blue chip companies and highly priced stocks that suffered losses recently on panic selloffs and profit-taking in the midst of volatility.
Recall that the fear over the raging face-off between Russia and Ukraine, as well as the earnings reporting season now at its peak, and improved payout by quoted companies on the strength of their stronger corporate numbers hitting the exchange.
More of these corporate earnings for the 2021 year ended December, are expected in the market with more companies notifying the exchange of their board meeting to approve l financial statements are on the increase as the March 31, 2022 remain the deadline for submission.
Despite the market volatility, discerning investors and traders are positioning in dividend paying stocks, ahead of dividend qualification and markdown dates, in the midst of high payouts.
The truth is that market pulse for the session revealed positive sentiment across the major sectors, especially with healthy buying interest in blue-chip stocks, on impressive numbers emanating from these companies, and an above average traded volume in the midst of strong positive breadth and sentiment.
However, this is an indication that market players are still looking forward to see the earnings and corporate actions of companies that are yet to release their numbers.
Revaluation of companies and sectors on fundamentals news and the better-than-expected earnings seems to be reckoned with after days of fear and selloffs, as players run for safety, while keenly observing developments in the political space ahead of next year’s general elections.
Meanwhile, as the presidents of Russia and Ukraine seems favourably disposed to compromise that will allow for peace, the rallying Brent crude price saw a pullback to trades around $117.40 per barrel at the international market, pushing equity markets higher, despite, exerting more pressure in inflation rate across the globe. However, the oscillating oil prices is expected to support our economic and market fundamentals, as crude oil prices hit new 14-year high.
The trading patterns in the midst of corporate actions and impressive numbers call for caution, as the NGX index action rebounded, touching 47,301 basis points on above average trade volume to remain above the 47,000 mark, ahead of more 2021 full-year audited results.
We expect market volatility to continue in the midst of an earnings reporting season, opportunities for the ‘buy’ and ‘sell’ sides of the market, but it is more important than ever to get good clear, and concise information to help firm up your trading and investing plans as the market awaits more big names to release their corporate earnings and actions as a push for positive reversal.
With all these in mind, I want to personally invite you to join me live today at Investdata Trading Academy with Ambrose every trading day at noon to get the real live position of the market and direction of individual stocks on exchange. This is necessary to help you make investment decisions at any point. Here, we advise you either as investors and traders to allow their stop-loss and profit targets guide you, while removing every atom of emotion.
Midweek, trade metrics revealed position taking, as the NGX index trades above the seven and 20-Day Moving Averages, while other indicators turned up.
While the ADX revered up to 60.05, for example, the RSI remained above 50, but declined further to 65.76 from 61.48. Money Flow Index inched up to 68.63 points on the daily time frame. The continuation of this trend depends largely on the interplay of market forces and flow of funds, as the direction of the fixed income market yields remains unclear.
Meanwhile, Wednesday’s trading started slightly on the upside, which was sustained throughout the session despite oscillating on buying interest and profit taking, a situation that pushed the NGX index to an intraday high of 47,301.45 basis points, from its lows of 47,158.74ps, and thereafter closed above its opening point at 47,287.09bps.
Market technicals were positive and mixed, as volume traded was lower than the previous day in the midst of breadth favouring the bulls on positive sentiments as revealed by Investdata’s Sentiment Report showing a 85% ‘buy’ volume and 15% ‘sell’ positions.
The total transaction volume index stood at 1.09 points, just as momentum behind the day’s performance remained relatively strong. Money Flow Index was down at 68.63 points, from the previous day’s 64.32 points, indicating funds entered the market.
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Index and Mkt Cap Movement
The key performance index NGXASI, at the close of the day trading gained 132.74 basis points at 47,287.09bps, after opening at 47,154.35bps, a 0. representing 28% growth, just as market capitalization rose l by N71.53bn, closing at N25.49tr, from the opening value of N25.41tr, also representing a 0.28% value gain.
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Midweek, upturn was driven by accumulation in Presco, Nestle, NB, PZM Pharmdeko, Ucap, FBNH, OKomu Oil, Flourmills, UBA, Access Bank, NEM, University Press, Conoil, and FBNH, among others.
This impacted positively on Year-To-Date gain, as it increased to 10.70%. Market capitalization growth stood at N2.78tr YTD, representing a 14.57% rise over the opening level for the year.
Mixed Sector Indices
Performance indexes across the sectors were mixed, as NGX Insurance, Consumer goods and Energy closed higher by 3.50%, 2.07% and 0.11% respectively, while NGX Banking led the decliners after losing 0.04%, followed by industrial goods with 0.01%.
Market breadth turned positive as gainers outnumbered losers in the ratio of 30:112, while activities in volume and value terms were mixed, after investors exchanged 336,31m shares worth N5.86bn, compared to the previous day’s 754.93m units valued at N3.64bn. Volume was boosted by trades in FBNH, GTCO, Ucap, Zenith Bank and Caverton Offshore.
Presco and Pharmdeko were the best-performing stocks for the day after gaining 10% and 9.89% respectively, closing at N114.95 and N2.00 per share on bonus/dividend expectation and market forces.
On the flip side, Ellah Lakes and May & Baker lost 9.92% and 9.91% respectively, closing at N3.45 and N4.91 per share, on selloffs and profit taking.
We expect the bulls to sustain its return on reaction to corporate actions and earnings in expectation of more release of 2021 audited financials with dividend announcement to boost positive vibes during this earnings season and rallying oil prices.
Also, the market continues to interpret the positive economic data in relationship with oil price and other factors, in the midst of profit-taking and portfolio rebalancing.
This will result in market players targeting fundamentally sound and dividend-paying stocks in the hope of dividend announcements, as the inflation rate moderates at 15.60% and Q4 GDP up at 3.98%, while the International Monetary Fund is calling for a hike in the interest rate and further devaluation of the Naira.
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