Investors Await MPC Outcome For Direction Ahead Of Corporate Actions 

Market Update for February 26
A seesaw movement resurfaced on the Nigerian Exchange on Monday, as trading witnessed a mixed session, starting the week on a negative note, thereby halting the previous day’s gain on a less than average traded volume and positive market breadth. This reflected the ongoing portfolio repositioning and cautious trading, while awaiting the outcome of the Central Bank of Nigeria’s Monetary Policy Committee meeting on Tuesday.
Selling pressure in some of the major sectors of the market and highly priced stocks pulled back the composite All-Share index, despite increased numbers of stocks that gained at the end of the trading session. Market players remain confident in the midst of dividend expectations and continued sector rotation in the face of rising inflation and FX volatility. Momentum and dividend investing persist in the financial sector and others, as the likes of FBN Holdings make new highs on the back of their changing shareholding structure, amid accumulation by the majority shareholder increasing his stake, which has blighted the company’s poor dividend possibility. More companies during the session notified the exchange of their board resolutions on the 2023 audited financials ahead of submission to their regulators. Others are also giving notice of their board meeting dates to approve their 2023 financial statement and dividend.
The benchmark NGX All-Share index pulled back on a low traded volume and selling sentiment as selloffs hit consumer goods and others ahead of their corporate actions.
Also, market players also reacted to the seeming mismatch of policies by the fiscal and monetary authorities that is evident in the rising macroeconomic headwinds. Unfortunately, however, an end to the situation is not insight due to the triple evils of Naira devaluation, imported inflation and lingering insecurity, among others. These monsters continue to weaken the purchasing power of Nigerians, wiping out their entire savings as sign of recession underway.
The recent change in trend and momentum are still intact, as the index trade below the T-Line to gather more strength and surpass the resistance level when it reverses up, already the index’s action is still within the distribution phase. The outcome of policy meeting today will shape and give direction to the market, as portfolio investors continue to diversify their investments across different windows on the strength of higher yields in fixed income market instruments, despite the runaway inflation environment.
The pullbacks and oscillations in the market have created buy opportunity for dividend investors ahead of the release of more audited accounts. Investors should watch out for the value areas of resistance and support levels, as more earnings hit the market any moment from now. The index’s action has displayed a mixed picture as market players eagerly await numbers from the companies, following the optimism fueled by the belief that the impressive performance from the financial sector among others may impact the market positively. This is despite concerns about the changing fundamentals of the economy in the face of rising macroeconomic headwinds that will support a revaluation of assets.
The equity market remains a leading indicator of the economy any time and any day, as such all eyes are still on the fiscal and monetary authorities for a clear direction of where the economy is heading, given developments in the FX market and global economy, especially the sustained geopolitical tensions in the Middle East and Eastern Europe. There is also the fear of a recession, among other issues that will continue to influence investment decisions, while driving volatility. The NGX index’s action trades below the T-line on daily basis in the midst of high volatility and mixed momentum to remain above the short- and long-term Moving Averages on the weekly and monthly time frame.
The candlestick formation at the end of the trading session revealed indecision among market players that requires confirmation as trading open on today.  Therefore, investors should target companies with consistent track records of dividend payment, strong fundamentals and growth prospects that will support further growth in earnings which price feeds on in any market cycle. Technically, the index’s action is still at overbought state with bearish money flow divergent which a topping chart pattern that signal correction.
The momentum indicators signaled weakness in the market, as the ADX continues to look down at 52.38 from high of 84.32, while RSI and Money Flow Index were mixed to read 61.40 and 50.67 points against the previous session 61.76 and 42.02 points respectively. This should be watch by players as they trade with caution because funds movement are somewhat in the market. The trading volume pattern suggests hold and watch disposition of market players, as traders reduce position in some sectors in the face of others investment windows returns remain below inflation and falling Naira.
To navigate the rest of the quarter profitably using fundamental and technical analysis to run, join investdata live sessions at noon every Monday, Wednesday and Friday 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 range market. Despite the oscillating volume of transaction witnessed in recent time, it is time to go shopping for undervalued stocks, sectors and the next insider playing opportunity.
Oil price inched up on Monday to continue its oscillation, as it trades at $82.53 per barrel in the midst of unclear direction of rate cuts and weak global demand outlook in the face of escalating Middle East conflict and red sea problem. Coupled with the Ukraine and Russia war that had persisted in the midst of inflation resurfacing as all eyes are on US, Europe and Japan reports.  The rising geopolitical tension across the globe is also a major threat to many economies and the commodity market. Also, oil supply increase by OPEC and others impact oil price as it continued to oscillate. This trend may likely continue in 2024, this up and down movement of oil price also continues to drive volatility.
Meanwhile, Monday’s trading opened slightly in the red and rebounded at midday before reversing on profit taking and selloffs in large cap stocks and others. This pushed the NGX’s index to an intraday low of 101,852.37bps, from its highs of 102,340,40bps, before closing slightly below its opening figure at 101,995.20ps.
Market technicals for the session were positive and mixed, as volume was marginally higher compared to the previous session in the midst of breadth favoring the bulls on a selling sentiment as revealed by Investdata’s Sentiments Report showing 29% buy position and 71% sell volume. The total transaction volume index stood at 0.52 points, just as impetus behind the day’s performance was relatively weak as Money Flow Index is looking up  at 50.67pts, from the previous day’s 42.02pts, indicating that funds entered the market, despite sliding down.
For you to successfully invest and trade in this volatile market in 2024, order for Investdata’s video on Buy & Sell Technical Analysis Toolbox to navigate the volatile market profitably, enhance trading decisions and boost your bottom line. Also, to up your game in stock trading and investing, understanding the key to trading price and index action will go a long way to make the difference in your trading results, check out the video materials below.
Index and Market Caps
At the end of Monday’s trading, the NGX All-Share Index slipped 93.09 basis points, closing at 101,995.53bps after opening at 102,088.07bps, representing a 0.09% drop, just as market capitalization fell by N50.63bn, closing at N55.81tr from the previous day’s N55.86tr, which also represented a 0.09% value loss.
Attention: If you have not signed up for INVESTDATA’s buy and sell signal setup, don’t delay, because the number of stocks entering their overbought range has just increased to 60 as they rallied to new highs that call for caution and positive chart patterns to be on our watchlist. These stocks have potentials to retrace, considering their earnings prospects and the oscillating moves in an upmarket and weak economy.
To become a member, send ‘YES’ or ‘STOCKS’ to the phone numbers below. Take advantage of this service to buy right and sell right at the current oscillating market in the midst of earnings season, portfolio reshuffling, and repositioning as we await an economic reform policy that can stimulate and re-track the economy to the path of growth and development.
Monday downturn was driven by selloffs in the shares of Nestle, Dangote Sugar, Presco, UBA, Accesscorp, Eterna and Fidson, among others, which impacted mildly on Year-To-Date gain which reduced to 36.41%. Market capitalization YTD gain stood at N14.12 trillion, representing 36.42% above its opening level for the year.
Mixed Sector Indices
The sectoral performance indexes for the session were mixed, as NGX Banking and Insurance closed higher by 1.35% and 0.18% respectively, while NGX Consumer goods led the decliners after losing 1.46% followed by Energy with 0.37%.
Market breadth was positive as gainers outnumbered losers in the ratio of 28:25, while activities in volume and value were up after investors exchanged 277.48m shares worth N6.22bn. Volume was driven by trades in, FBNH, UBA, Zenith Bank, Fidelity Bank and Veritas Kapital Assurance.
Nascon and Juli Pharmacy were the best performing stocks, gaining 10% and 9.83% closing at N66.00 and N2.57 per share respectively on market forces and sentiment. On the flip side, Nestle and Eterna lost 10% and 9.97% respectively, closing at N990.00 and N15.80per share, purely on selloffs and profit taking.
Market Outlook
We expect the outcome of the MPC meeting to give direction and increase the ongoing diversification in the face of expected audited corporate earnings and dividend announcements. This is amidst the volatility and peak of earnings season, while pullback at this point will add more strength to upside potential. As such, investors should take advantage of price correction. Also looking at the trends and events across the globe and domestically.
Ambrose Omordion
CRO|Investdata Consulting Ltd