Market Update for March 27
The bulls resurfaced on the Nigerian Exchange at midweek, as market players continue to digest the outcome of the Central Bank of Nigeria’s policy meeting which ended on Tuesday. The resurgence was amidst the positive earnings announcement from Accesscorp and United Capital which changed market sentiments, halting two consecutive sessions of bear-run on rekindled buying interests in financial services stocks, among others.
Consequently, the benchmark NGX All-Share index closed higher on a high traded volume and positive market breadth in the face of quarter-end window dressing by fund managers desiring to close their position higher for the period. This is in addition to the earnings season which has reached its peak as official deadline for submission of December 31, year-end audited accounts enters its closing hours, except for companies that already notified the NGX of late submission before now. We expect that the state of these earnings reports and reactions to the latest TB auction rates will shape the market going forward into Q2, as portfolio rebalancing and sector rotation continued in search of higher returns to hedge against the rising inflation.
During the session, the audited accounts of Accesscorp and Ucap were released and impressive, showing stronger numbers. This supported the growth in their final dividend payout of N1.80 each by Accesscorp for example after reporting gross earnings and bottom line growth of 89% and 305% respectively to N2.5tr and N619.13bn in 2023. Ucap’s top line and profit level were in the green by 71% and 20% respectively to N45.9bn and N11.42bn in 2023. The market reacted to these scorecards as they gave insights into what the market should expect from the financial sector.
NGX index action continues to range, remaining in its distribution phase and a bottom reversal chart pattern that signal recovery and uptrend. Although, we see government and its economic team trying to return the nation’s economy to the path of recovery, even with the continued mismatch of policies and implementation style that reflects a disconnection between the fiscal and monetary perspectives. It does seem that the MPC has sacrificed the economy on the altar of attracting foreign inflows with the increasing interest rate for improved foreign exchange supply that will help address FX challenges and checkmate inflation, as the CBN says it has cleared all genuine FX backlogs, which is why the Naira has started appreciating, just as external reserves is looking up after many months of decline. We can only hope that this will support productivity and attract foreign investors.
More companies on the Exchange continue announcing board meetings to approve their 2023 audited financials and unaudited Q1 2024 reports. The latest are CAP, UBA, SterlingNG, McNichols, Berger Paints, Vitafoam, Jaiz Bank among others, while Airtel Africa updates the market on insiders dealing and ongoing share buyback. 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 NGX is still relatively strong as bullish sentiment resurfaced as revealed by candlesticks formation, as momentum indicators revealed change in strength to signal weakness in the market, as ADX is looking down at 35.88, while RSI and Money Flow Index are mixed to read 62.29 and 68.13 points against the previous session 60.90 and 68.35 points respectively. These indicates change in trend, market players should watch out and trade with caution after the index had formed a top pattern and momentum is becoming weak. Also, trading volume pattern remained mixed, to suggests wait and see in some sectors and position taking in the face of others investment windows returns remain below inflation as Naira continues to look up in recent days.
To navigate the rest of the quarter and beyond 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 at midweek slide further to continue its oscillation, as it trades at $86.09 per barrel in the midst of stronger dollar and sudden rise in US crude inventories, as ceasefire talk in Gaza still shaking in tightening supply as a result of rising geopolitical tension across the globe remained a major threat to many economies and the commodity market. Also, OPEC left production cuts unchanged and other factors that impact oil price as it continued to oscillate. This trend may likely continue in 2024, this up and down movement that drive volatility. As middle East conflict and war in Ukraine last.
Midweek’s trading started slightly in the downside but rebounded at mid-morning and it was sustained throughout the session, on buying interest in banking stocks, blue chip companies and others. This situation pushed the NGX’s index to an intraday high of 104,292.30bps from its lows of 103,844.40bps, before closing above its opening figure at 104,283.60bps.
Market technicals for the session were positive and strong, as volume was higher compared to the previous session in the midst of breadth favoring the bulls on a buying sentiment as revealed by Investdata’s Sentiments Report showing 98% buy position and 2% sell volume. The total transaction volume index stood at 1.40 points, just as momentum behind the day’s performance was relatively strong as Money Flow Index was slightly down at 68.13pts, from the previous day’s 68.35pts, indicating that funds left the market, despite closing higher.
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Index and Market Caps
At the end of midweek’s trading, the composite NGX All-Share Index gained 331.17bps, closing at 104,283.64bps after opening at 103,952.47bps, representing a 0.32% up, just as market capitalization rose by N187.24bn, closing at N58.96tr from the previous day’s N58.76tr, which also represented a 0.32% appreciation in value.
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.
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Meanwhile, the upturn was driven by accumulation in the shares of Zenith Bank, GTCO, UBA, Accesscorp, Ucap, FCMB, NGXgroup, Conhall Plc and UPDC among others, which impacted positively on Year-To-Date gain which inched up to 39.47%. Market capitalization YTD gain stood at N14.12trillion, representing 41.09% above its opening level for the year.
Mixed Sector Indices
The sectoral performance indexes were mixed, as NGX Consumer goods closed lower with 0.11%, while NGX Banking led the advancers after gaining 3.01%, followed by Insurance and Industrial goods with 0.12% and 0.07% respectively. Just as NGX Energy finished flat.
Market breadth was positive as gainer’s outnumbered losers in the ratio of 29:20, while activities in volume and value were up after investors exchanged 499.71m shares worth N12.41bn. Volume was driven by trades in Accesscorp, Zenith Bank, UBA, GTCO and Transcorp.
CWG and Juli Pharmacy were the best performing stocks, gaining 10% and 9.97% closing at N7.15 and N9.49per share respectively on market forces and sentiment. On the flip side, NNFM and Prestige Assurance lost 9.97% and 9.68% respectively, closing at N48.30 and N0.56 per share, purely on profit taking.
Market Outlook
We expect a mixed sentiment and position taking to continue as players digest the TB rates outcome and corporate earnings inflow with dividend announcements, while taking advantage of low valuation to position and rebalancing portfolio.
This is amid the volatility and pullbacks that 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.
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Sub-Topics
- Actionable Trade Roadmap And Strategies For Any Market Cycle, Mr Olatunde Amolegbe Managing Director Arthur Stevens Asset Management Ltd
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Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
08028164085
