Mixed Market Lingers, Amid Earnings, Saturday’s Presidential NASS Polls
Market Update for February 21
The seesaw movement resurfaced on the Nigerian Exchange on Tuesday as cautious trading and volatility dominated the session ahead of weekend’s Presidential and National Assembly general elections in the midst of full year audited corporate earnings inflow and action expectations.
Profit taking and indecision among traders halted the previous session’s rebound as the key performance NGX All-Share index closed marginally lower on an above average traded volume and negative breadth. This revealed no supply bar, an indication that smart money may markup prices at this points, especially with the prevailing low rates and yields in the fixed income market instrument but let us wait to confirm as election date draw closer. Volume was boosted by a cross deal of 125m units of Geregu Power at a negotiated price. Even as Courtville Business Solution notified investors of its Mandatory Take Over bid at 48kobo, which will be followed by a delisting of it’s entire shares in issue from the bourse.
The selling sentiment on Tuesday may continue to create a buy opportunity for income investors as they position in dividend paying stocks and reshuffle their portfolios on the strength of unaudited corporate earnings released so far ahead of their dividend announcement in the midst of rising inflation rate of 21.82% and strong momentum.
All eyes are on the early filers this week to start hitting the market with their 2022 full year scorecards in the face of rising inflation and low yields in the fixed income market, as market players hedging against inflation will continue to favour some sectors and stocks with high dividend yields and strong earnings to support high payouts. This is especially true of banking stocks and others with strong fundamentals and earnings that supports higher payout or dividend growth at this session.
The market remains above the 54,000 mark, despite the slight pullback as a result of profit booking and selloffs in some stocks to reposition in companies that are expected to declare dividend between now and March 31, 2023. Meanwhile, mixed sentiments continue across some major sectors of the market, except for energy that were hit with position taking on the strength of impressive earnings performance. The actual state of the audited financials will give a clear direction, just as it may signal the continuation of this recovery in the month of February, notwithstanding uncertainties associated with the coming 2023 general elections.
Technically, the NGX index’s action had signal distribution phase which support correction after forming cup and handle chart patterns that signals reversal or continuation of trend on a daily and weekly time frame. Just as bearish divergence between the index action and MACD on a dally chart that supports pullback. Let us keep our gaze on market forces and money flow.
To navigate the rest of the quarter 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 range market. Despite the low volume of transaction witnessed, it is time to go shopping for undervalued stocks, sectors and the next insider playing opportunity.
Oil price oscillation continued, pulling back to trade at $82.68 per barrel, as US president said oil will be much longer, just as China wants better term for crucial Iran oil project in the face of fear of rate hike by Fed and rising attacked on Ukraine. This geopolitical tension, high interest and inflation rates across the globe continue to threaten the world. Also, supply tightened due to the Russia-Ukraine war that has lingered so far. The up and down movement of oil price also continues to drive volatility across markets.
Tuesday’s trading opened slightly in the downside, which was sustained for the rest of the session, despite oscillating on buying interests and profit taking among all classes of stocks, a situation that pushed the NGXASI to an intraday low of 54,182.61 basis points from its highs of 54,224.54bps, before closing slightly below its opening figure at 54,189.31bps.
Market technicals were negative and mixed with lower volume of trade, compared to the previous session in the midst of breadth favoring bears on a selling sentiment as revealed by Investdata’s Sentiments Report showing 16% buy position and 84% sell volume. The total transaction volume index stood at 0.46points, just as energy behind the day’s performance was strong as Money Flow Index looked down at 84.81pts, from the previous day’s 85.01pts, indicating that funds left the market.
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Index and Market Caps
The benchmark NGX All-Share Index, at the end of the day’s trading slipped by 35.04basis points, closing at 54,189.31bps, after opening at 54,224.35bps, representing a 0.06% down, just as market capitalization fell by N19.09bn closing at N29.52tr from the previous day’s N29.54tr, which also represented a 0.06% value loss.
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Meanwhile, Tuesday’s downturn was driven by profit taking and selloffs in the shares of Accesscorp, International Breweries, UACN, UBN, Fidson, Cutix and CHI Plc among others, which impacted mildly on Year-To-Date gain to 5.73%. Market capitalization YTD gain increased at N1.82tr, representing 5.75% above its opening level for the year.
Bearish Sector Indices
Sectorial performance indexes for the session were down, except for NGX Oil/Gas that closed 0.28% higher, while the NGX Banking led the decliners after losing 0.38%, followed by Insurance and Consumer goods with 0.22% and 0.16% respectively. Just as NGX Industrial index was flat.
Market breadth was negative as losers outnumbered gainers in the ratio of 15:9, while activities in volume and value were mixed, as stockbrokers crossed 154.61m shares worth N5.51bn. Volume was driven by trades in GTCO, Zenith Bank, Accesscorp, UBA and Fidelity Bank.
MRS Oil and Tripple Gee were the best performing stocks after gaining 10% and 9.63% respectively, closing at N25.30 and N2.39per share respectively on impressive earnings and market forces. On the flip side, Veritas Kapital and Linkage Assurance lost 4.76% and 3.44% respectively, closing at N0.20 and N0.43per share, purely on selloffs and profit taking.
We expect mixed and positive sentiments to continue as market players digest January CPI data ahead of GDP reports and Saturday Election in the midst of corporate earnings expectation, portfolio rebalancing, falling rates and anxiety over the election uncertainty. Any pullback at this point may 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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