Market Update for the Week Ended April 6 and Outlook for April 11-14

Volatility and selloffs continued on the Nigerian Exchange in the first trading week of the second quarter with all eyes on the delay 2022 audited financials from the banks, among others, as well as macroeconomic data and 2023 Q1 numbers from companies with December year-ends. It is noteworthy that one of the early filers, Infinity Trust Mortgage Bank, presented its earnings report for the first quarter ended march 31, 2023 with numbers that were impressive, considering the current economic challenges, especially events that happened in same period of the year. The company’s top and bottom lines were in the green, offering an insight into what investors would likely see across the banking industry.
The tension arising from Nigeria’s high inflation, interest rates and yields continue to drive volatility on her equity market over the past two week, amidst expected Consumer Price Index for the month of March, while all eyes are on the ongoing transition of government amid hopes of reforms, and policy shifts, among others.
The continued portfolio rebalancing and weak market momentum continues to be reflected on the decliners and advancers table for the week, as the price adjustment dates of many companies for dividends comes up this month, besides profit taking and reactions to expected earnings reports. Most listed companies have also notified the Exchange of their board meetings to approve the Q1 financials, preparatory to announcing presenting same to the market. We note also that the NGX’s Price-to-Earnings ratio remains relatively low and attractive for investments, following which we foresee a mixed trend in the market in this Q2 and beyond.
To navigate Q2, 2023 market volatility and the rest of the year mixed outlook profitably using fundamental and technical analysis to run, join investdata live sessions at noon every 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 market correction. As volume of transaction witnessed within the week remain above the average traded volume, it is time to go shopping for undervalued stocks, sectors and the next insider playing opportunity.
Oil price during the week under review continued its oscillation, hitting a recent high after touching its 15-month low, trading at $84.18 per barrel in the midst of rate hikes, fear of a full blown recession and mixed outlook for China’s economic recovery. We note also the rising geopolitical tensions across the globe and supply disruptions due to the Russia-Ukraine war that has lingered for over a year, and is indeed escalating. The up and down movement of oil prices also continues to drive volatility across different investment windows.

Movement Of NGXASI
Meanwhile, it was a bearish week, as the NGX recorded four straight trading sessions of negative outing, before the Easter holiday which began on Friday, to mark the resurrection of Christ.
This down market was attributed to profit taking, selloffs, reaction to relatively low dividend payout and adjustment for dividends recommended by company boards. This pushed the index action sharply on a sell sentiment, ahead of more corporate earnings that now make the market attractive for technical traders as they keep their eyes on strong support and resistance levels.
Trading for the week started on a negative note, halting the gains recorded in the previous session as the NGX All-Share index lost 0.08%, a trend it sustained for the rest of the week, when it shed 0.27%, 1.88% and 0.05% respectively on Tuesday, Wednesday and Thursday. This brought the week’s total loss to 2.28%, in addition to the previous week’s 1.20% negative position.
Consequently, the benchmark NGX All-Share Index shed a total of 1,238.21 basis points, which left it at 52,994.13bps, from the previous week’s 54,232.34 points closing level. Within the period, the index even touched an intra-week low of 52,991.04bps, from its highs of 54,236.59bps. Similarly, market capitalisation fell by N675bn, also representing a 2.28% value loss at N28.87tr, from the previous week’s N29.54tr,
The week’s top gainers chart was dominated by low and medium cap stocks amid selloffs and mixed sentiment in dividend paying companies as volatility and portfolio repositioning continued. Also notable is the fact that market players were accumulating positions after seeing the audited results from different sectors and their dividend announcement ahead of their Q1 numbers. So buying into value, strong earnings and high dividend yield companies continued, as the market’s recovery and correction persisted, heading for 52,000 and 51,000 levels again.
Market technicals revealed a negative breadth as losers outnumbered gainers in the ratio of 37:16 on a selling sentiment as indicated by investdata sentiment report showing 0% ‘buy’ volume and 100% sell position. Money Flow Index looking down to read 59.63bps, from the previous week’s 66.49points, an indication that funds left the market on a weekly chart to reflect selloffs and profit taking in major stocks and major sectors of the market, in the face of high inflation rate and uptick in fixed income market yields.
The NGX index’s action extended its pullbacks to breakdown the T line and 20-Day moving average ahead of 50 DMA on above average traded volume to formed a descending triangle or a bearish candlestick that supports a downtrend, which need to be confirm in the new week as more financials are expected in the market, despite profit taking experienced last week.
Despite the selloffs, there were yet position taking as the benchmark index traded above its 50 and 100-Day moving average, even as correction is ongoing in the market, the state of the expected numbers and improved liquidity on payment dates will signal reversal or continuation of trend. This depends on market forces as all eyes are on more financials that will give direction as trading opens on Tuesday. We note that the volume which supported this correction and pullbacks remains mixed and above the market’s traded average, just as reaction to the expected results and others could support reversal at this level.

Bearish Sectoral Indices
The sectorial performance indexes for the week were in the red, save for the NGX Insurance that closed 2.19% higher, while the NGX Banking led the decliners’ after losing 1.05%, followed by Consumer goods, Energy and Industrial goods with 0.63%, 0.11% and 0.04% respectively.
Activities in volume and value were down, as market players executed 1.05bn shares worth N10.05bn, compared to the previous week’s 2.07 billion units valued at N17.56bn. Volume was driven by Financial Services, Conglomerates and Energy sectors, boosted by trading Transcorp, UBA, Fidelity Bank, Zenith Bank and Oando.
Nahco and Mansard Insurance were the best-performing stocks for the week, gaining 20.99% and 15.79% respectively, closing at N9.80and N2.20per share on impressive dividend payout and stronger earnings. On the flip side, Eterna and Multiverse had 19.12%and 18.83% respectively, at N5.50 and N2,63 per share, purely on selloffs.

Outlook for the week
Despite last week’s selling sentiments, the market present value for discerning investor and smart money which supports an uptrend, depending on market forces in the midst of price adjustment and earnings expectations, just as market players await incoming government agenda and policies. However, retracement to the 52,578.12 level and below is possible on profit taking as global and domestic events unfold.
Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
Tel: 08028164085, 08179547605