Expects Mixed Sentiments On Profit Taking, Reaction To Earnings Inflow, Price Adjustment, Dividend Payment

Market Update for April 27
It was a mixed session on the Nigerian Exchange on Thursday as the positive momentum continued despite profit taking in some of the major stocks that had rallied recently on improved liquidity, impressive corporate earnings and actions in form of dividend announcement and payments.
The increased buying activity in selected sectors and stocks pushed the benchmark NGX All Share Index to close higher on a very high traded volume and positive market breadth, trading above the 52,000 basis point mark, which extended the bull run for a sixth consecutive session to solidified the markup phase of the market ahead of the last trading day of April in expectation of more Q1 numbers to give market direction.
While the pending 2022 audited accounts are being presented to the market alongside first quarter corporate earnings, majority of which are impressive and beat expectations, the full year result from Fidelity Bank was remarkable and outstanding with top and bottom line growth that supported a final dividend of 40 kobo. Also, the market also received the Q1 numbers from BUA Foods, Nascon, Livestock Feeds, Seplat, and NEM Insurance, among others, all of which were impressive. Others like BUA Cement, Guinness, and Geregu Power were however mixed and even below expectation, reflecting the nation’s economic headwinds that resulted from the cash crunch in the first few months of the year.
Also, there is the prevailing low prices of many stocks in the market due to price adjustments that has made many companies attractive for new entry and repositioning of portfolios in the midst of high inflation and contracting economic activities as result of high cost of funds that are impacting negatively on the general economy.
Already, the market had extended it recovery from its oversold state as the NGXASI traded above the T line to test the 20-Day simple moving average and EMA that support uptrend pattern for technical traders and discerning investors. This, however, requires confirmation before players can fully jump into any position, especially as stocks have rally for some days to witness profit booking, despite the prevailing undervalued state. Q1 numbers are likely to come predominantly mixed, due to the low economic activities during the period as a result of to cash crunch.
The prevailing dividend yields and low market price to earnings ratio provides better opportunities for discerning investors to hedge against inflation even when fixed income market yields look attractive. There is equally the uncertainty of a rate crash by the incoming government to drive the economy, just as the planned fuel subsidy removal has been suspended by the Federal Government signal possibility of policy shift that may be a plus for equities on a likely financial market and economic reset. Market volatility remains at the extreme on positive sentiment as the T-line turned support for index action ahead of the next market forces.
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Oil price oscillation continued, as it rebound to trade at $78.85 per barrel in the midst of increasing fear of recession and high booking of Chinese ahead of May holiday. As fear of western central banks hiking rates in May, even when their economies are contracting in the face Ukraine attack and rising geopolitical tension across the globe, the prevailing high interest rate regime and soaring inflation, despite slowing down across the globe remain potent threat to world economy. Also, supply tightened due to the Russia-Ukraine war that entered the second year. The up and down movement of oil price also continues to drive volatility across markets.
Thursday’s trading started on the upside and oscillated for the rest of the session on buying interests and profit taking in some stocks, a situation that pushed the NGXASI to an intraday high of 52,308.30 basis points from its lows of 52,084.74ps, before closing above its opening level at 52,235.88bps.
Market technicals were positive and mixed with higher volume traded, when compared to the previous session in the midst of breadth favoring the bulls on a mixed sentiment as revealed by Investdata’s Sentiments Report showing 68% buy position and 32% sell volume. The total transaction volume index stood at 4.78 points, just as impetus behind the day’s performance heightened as Money Flow Index reads 56.12pts, from the previous day’s 40.53pts, indicating that funds entered the market.
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Index and Market Caps
At the end of Thursday’s trading, the composite NGXASI gained 138.26 basis points, closing at 52,235.88bps from its 52,097.62bps opening level, representing a 0.27% growth, just as market capitalization rose by N75.28bn to close at N28.44tr, from the previous day’s N28.37tr, which also represented a 0.27% value gain.
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Meanwhile, the day’s upturn was driven by position taking in the shares of BUA Foods, PZ, Nascon, Transcorp, Cadbury, Fidson, Nahco, Mansard and Honeywell among others, which impacted positively on Year-To-Date gain as it increased to 1.92%. Market capitalization YTD gain stood at N185 billion, representing 1.89% above its opening level for the year.

Mixed Sector Indices
Sectorial performance indexes were mixed, as the NGX Banking and Industrial goods closed lover by 0.45% and 0.05% respectively, while NGX Consumer goods led the advancers after gaining 1.98%, followed by Insurance and Energy with 0.42% and 0.15% respectively.
Market breadth was positive as gainers outpaced losers in the ratio of 26:18, while transactions in volume and value were down after investors exchanged 2.33bn shares worth N17.62bn, driven by trades in Accesscorp, Transcorp, Japaul Gold, UBA and Fidelity Bank.
Honeywell Flour and Cadbury were the best performing for the day after gaining 10% and 9.8% respectively to close at N3.08 and N12.30 per share, on market sentiment and impressive Q1 numbers. On the flip side, NB and International Energy Insurance lost 10% and 9.5% respectively, closing at N32.85 and N1.24per share, purely on unimpressive Q1 report and profit taking.

Market Outlook
Being the last trading day of the month, we expect mixed sentiments on profit taking and reaction to corporate earnings, as more Q1 earnings hits the market in the midst of price adjustments and dividend payments.
We note that discerning investors have continued to target fundamentally sound companies and defensive stocks to protect their portfolios post-dividend adjustments. Any pullback at this point may add more strength to upside potentials. As such, investors should take advantage of price rally to take profit. Also looking at the trends and events across the globe and domestically.

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