Market Update for March 3

Trading on the Nigerian Exchange started the month and week negative, reversing the previous gain to continue its seesaw movement in the midst of selling sentiment and inflow of mixed audited corporate earnings and dividend payout. The market, however, reacted to these numbers on the strength of their numbers in relation to the market price and future prospects of the company and its sector.

The benchmark NGX All-Share index remains weak, even as it is trending downwards and signaling a bottom reversal pattern that needs confirmation even as investors await more earnings reports. Already, other emerging macroeconomic data have remained positive as confirmed by the February Purchasing Manager Index that rose to 53.7 points from 52.0 points in January 2025 according to Stanbic IBTC report.  This indicates strong improvement in business conditions and activities in Nigeria since January 2024. This latest expansion is a good one to start the year if sustained with positive economic policy from the fiscal and monetary authorities.

The benchmark NGX All-Share index closed lower on a low traded volume and negative market breadth that reflects selloffs and portfolio reshuffling on the exchange in line with its counterparts across the globe. Downtrend continues to persist in some of the major sectors of the market amid declining yields in the fixed income market, as dividend announcements seem to be below market expectation and fail to give impetus to the market in the midst of changing market fundamentals that called for new strategies to protect capital and profit from the season.

This wave of corrections and funds leaving the market are short-term realities of any market in the world that may be a concern for some investors while others are taking advantage of the pullbacks which are driven by market dynamics in repositioning and preparation for more audited scorecards and dividend expectation. Importantly also at this period are dividend payout and yields which remain very important to players at a time like this, when prices are looking down. Knowing that different phases of the market comes with its own opportunities and risk, especially with reactions to earnings as market players are studying corporate  numbers and rate direction of the apex bank.

At the current phase of the NGX, investors should target dividend paying companies, defensive stocks as pullbacks will impact dividend yields positively and provide room for higher upside that support capital gain. This is because the market had entered the overbought region that signals price adjustment and corrections in the midst of  selling sentiments for some sectors, consolidation moves in some industries and expectations of positive corporate numbers from some others, based on their quarterly and full year unaudited performance, coupled with their  dividend payouts history.

Technically, money flow and other momentum tools were down, revealing weakness and  selloffs that present opportunities of buying low and selling high in the midst ongoing volatility and selling sentiment. The index inching down further signal caution thereby creating the perfect setup for high probability of continuation to catch dividend season repositioning at the right price. Also, as the index trades below the T-line and above the two moving averages of 50-EMA and 50-SMA, this indicates relatively strength in the face of changing market fundamentals and technicals on the NGX and the economy.

The NGX index continues on a downtrend in the midst of selling sentiment, as revealed by candlestick formation and momentum indicators, as the ADX inched lower to 43.73points, while RSI and Money Flow Index were down at 59.06 and 29.99 points against the previous session’s 62.94 and 37.40 points respectively. Consequently, market players should watch this current trend and trade wisely in the face of funds leaving the market on a mixed sentiment in some sectors and profit taking in others on a daily time frame. Also, trading volume pattern continued to oscillates, suggesting smart money are locking in traders into bad position amid players revaluing the market and short term opportunities, looking at economic events in the face of policy direction of the government that look inconsistent and global economic outlook remained mixed in the face of trade war tension.

To navigate the rest of Q1 and beyond profitably, it is important to run with economic events, fundamental and technical analysis, join investdata live sessions at noon every Monday, Wednesday and Friday’s trading session “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 pullbacks. Despite the oscillating volume of transaction witnessed in recent time, it is time to position in undervalued stocks, sectors and the next insider playing opportunity.

Oil prices on Monday was up to continue its oscillation, as it trades at $73.17 per barrel in the midst of upbeat in China’s manufacturing activity and  Russia-Ukraine peace talk move by some EU leaders. Just as US inventory is looking up ahead of Trump tariffs regime kicking off March 4, 2025. Even as OPEC rethinking production ramp up on US government moves on trade war. As all eyes are on US President Policy uncertainty continued to drive volatility.  The geopolitical tension across many economies remains a concern to the global economy and energy consumption in 2025. This trend may likely continue, while the up and down movement continues to drive volatility, even as the raging war between Ukraine and Russia continues to influence global oil supply and demand.

Meanwhile, Monday’s trading opened on the upside before pulling back in afternoon and was sustained throughout the session on selloffs across the major sectors. The situation pushed the NGX’s index to an intra-day low of 107,455.09bps from its highs of 107,955.10bps, before closing below its opening level at 107,455.09bps.

Market technicals were negative and weak with lower volume when compared to the previous session in the midst of breadth favoring the bears on a selling pressure as revealed by Investdata’s Sentiments Report showing 0% buy position and 100% sell volume. The total transaction volume index stood at 0.64points, just as impetus behind the day’s performance was weak as Money Flow Index inched lower to read 29.99pts, from the previous day’s 37.40pts, indicating that funds left the market.

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Index and Market Caps

The NGX All-Share Index at the end of trading shed 366.26 basis points, closing at 107,455.13bps from 107,821.39bps, representing a 0.34% decline, while market capitalization went up by N94.61bn, at N67.29r from the previous day’s N67.19tr, representing a 0.13% value gain due to the listing of additional 18.20 billion ordinary shares of Fidelity Bank arising from its recent primary market activity.

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The downturn was driven by profit taking and selloffs in the shares of Wapco, ETI, Fidson, International Breweries, Mansard, FCMB, NGXgroup and Lasaco, among others. This impacted mildly on Year-To-Date gain that inched lower to 4.61%, while Market capitalization gain stood at N5.28tr, representing 7.02% increase over its opening level for the year.

Bearish Sector Indices

Sectoral performance indexes were down, save for the NGX Energy index that closed 0.42% higher, while the NGX Banking index led the decliners, losing 1.20%. It was followed by the Consumer, Insurance and Industrial  Goods with 1.03%, 0.57% and 0.02% respectively.

Market breadth was negative, as losers outnumbered gainers in the ratio of 33:19, while activities in volume and value were down after investors exchanged 308.09 million shares worth N7.23bn. Volume was driven by trades in Zenith Bank, Fidelity Bank, Accesscorp, JNGXGroup and Ellahlakes.

Learn Africa and NGXGroup were the best performing stocks after gaining 10% each, closing at N3.63 and N33.00 per share respectively on the back of sentiment and impressive earnings reports. On the flip side, Ikeja Hotel and Ucap lost 9.92% and 9.91%, closing at N10.90 and N20.00per share, purely on profit taking.

Market Outlook

We expect mixed sentiment to continue as selloffs slows down and investors digest latest corporate earnings and corporate actions in the midst portfolio reshuffling and positioining. Even as more earnings reports are expected to hit the market with dividend announcement. Also, sector rotation and portfolio rebalancing continued in the market with investors taking advantage of price correction to buy into value.

This is amid the volatility and pullbacks that add more strength to upside potential. Consequently, 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

info@investdata.com.ng

ambrose.o@investdataonline.com

ambroseconsultants@yahoo.com

08028164085