Expect Uptrend As Investors Bet On Earnings Inflow, Dividends Market Update for March 2


Expect Uptrend As Investors Bet On Earnings Inflow, Dividends
Market Update for March 2


Thursday’s trading on the Nigerian Exchange was a mixed session of profit taking and positioning in dividend paying stocks, as more quoted companies released their 2022 audited financials and corporate actions, thereby driving volatility and sentiments on the exchange. There were also buying interests in highly priced stocks like Airtel Africa and Geregu Power. This push the benchmark NGX All Share index higher, halting the previous day loss in the midst of an above average traded volume and negative market breadth. The hammer candlestick formation at the end of the session trading signaled a reversal which need to be confirmed as trading opens Friday.
The buying sentiments as market players reacted to the numbers released so far in thelis earnings reporting season continued to support the prevailing strong momentum in the equity space. Already, many companies have notified the investing public of their board meetings to approve audited result and recommend dividend for the period, after the unaudited accounts had given investors an insight into what is likely to come as dividend, following which such results should hit the market any moment before the month end.
The mixed macroeconomic data and the ongoing cash crunch impacted negatively on business activities as revealed by manufacturers’ Purchasing Managers’ Index (PMI) that contracted to 44.7 points in February, from 53.5 points in January released by Stanbic IBTC reports. This is the first contraction in private sector business conditions in over two years. We expect that the post-presidential polls confidence should influence the market, but for the credibility issues surrounding the outcome, following which many are indifferent, despite the fact that the exercise produced a president elect. It is interesting that the market still offers a ‘buy’ opportunity for dividend income investors as they reshuffle their portfolios on the strength of the prevailing high inflation rate of 21.82% and strong momentum behind many of these dividend paying companies.
The NGX All-Share index rebounded and is heading for the 56,000 basis points mark, while trading above the T line on a strong momentum, amid repositioning in some companies and sectors expected to declare dividends between now and March 31, 2023. The actual state of these audited financials will give a clear direction, just as it may support the continuation of this recovery in the new month, notwithstanding uncertainties associated with the 2023 general elections.
Technically, the NGX index’s action is on a recovery or markup phase which may support an uptrend, after forming cup and handle chart patterns that signal a reversal or continuation of trend on a daily and weekly time frame. This is aside the bullish divergence between the index action and MACD on a dally chart that supports an uptrend. Let us keep our gaze on market forces and money flow which is looking flat.
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Oil price oscillation continued, as it trade at $84.61 per barrel on strong demand for oil as China economic recovery continue in the midst of rate hike by the Feds. Also, the attack on Ukraine is rising even when China is calling for peace and a ceasefire. This geopolitical tension, the prevailing high interest rate regime and soaring inflation across the globe remain potent threat to world peace. Also, supply tightened due to the Russia-Ukraine war that entered into it’s first year last week. The up and down movement of oil price also continues to drive volatility across markets.
Meanwhile, Thursday’s trading opened on the upside but oscillated throughout the session to rebound on position taking in highly priced stocks and blue chip companies, as investors reacted to corporate actions, a situation that pushed the NGXASI to an intraday high of 55,670.24 basis points from its lows of 55,281.94bps, before closing above its opening figure at 55,670.24bps.
Market technicals were mixed and positive with lowervolume of trade, compared to the previous session in the midst of breadth favoring bears on a buying pressure as revealed by Investdata’s Sentiments Report showing 100% buy position and 0% sell volume. The total transaction volume index stood at 0.76 points, just as impetus behind the day’s performance was strong going by Money Flow Index at 72.68pts, from the previous day’s 74.22pts, indicating that funds left the market, despite closing higher.
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Index and Market Caps
The composite NGX All-Share Index, at the close of Thursday’s trading gained 161.63basis points, closing at 55,670.24bps, after opening at 55,508.61bps, representing a 0.30% growth, just as market capitalization rose by N88.05bn to N30.33tr, from the previous day’s N30.24tr, which also represented a 0.30% value gain.
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Thursday’s upturn was driven by demand in the shares of Airtel Africa, Geregu Power, Dangote Sugar, Nascon, UPDC, PZ and Unity Bank among others, which impacted positively on Year-To-Date gain to 8.62%. Market capitalization YTD gain increased by N2.58tr, representing 8.64% above its opening level for the year.

Mixed Sector Indices
Sectorial performance indexes for the session were mixed, as the NGX Consumer Goods closed higher by 0.58%, while the NGX Banking led the decliners after losing 1.11%, followed by Energy and Insurance indexes with 0.25% and 0.09% apiece. Just as Industrial goods closed flat.
Market breadth turned negative as losers outnumbered gainers in the ratio of 25:16, while activities in volume and value were down as stockbrokers traded 206.11m shares worth N3.26bn. Volume was driven by trades in Transcorp, Accesscorp, UACN, GTCO and Zenith Bank,
SUNU Assurance and Geregu Power were the best performing stocks after gaining 10% and 9.02% respectively, closing at N0.44 and N325 per share respectively on market forces. On the flip side, Sovereign Trust Insurance and Academy Press lost 10% and 9.38% respectively, closing at N0.27 and N1.16per share, purely on selloffs.

Market Outlook
We expect positive sentiments and mixed trend to continue as investors react to impressive earnings and dividend payout. Also, the eventual outcome of the presidential election is likely to boost confidence, as other parities move to the court for redress and peace return to the system. Market players target dividend paying companies and defensive stocks to protect their portfolios ahead of the governorship and state assembly polls outcome. Any pullback at this point may add more strength to upside potentials. As such, investors should take advantage of price correction. Also looking at the trends and events across the globe and domestically.

Crucial Announcement
As the new year begins, you need to get started with activities that will help you in achieving your goals for the year. To this end, I must tell you that events and activities that happened in 2022 will shape 2023.
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Ambrose Omordion
CRO|Investdata Consulting Ltd
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