Mixed Sentiment May Persist Ahead Of MPC Outcome, Q4 GDP Data, Corporate Actions

Market Update for the Week Ended January 20 and Outlook for Jan 23-27

Equity prices closed higher on the Nigerian Exchange last week in the midst of profit taking and cautious trading ahead of the two-day Monetary Policy Committee (MPC) meeting beginning today. This is just as financial services companies are billed to kick off the earnings reporting season for 2022 scorecards and dividend announcement any moment from February.

With the general elections drawing closer, position taking in blue chip stocks and market momentum waxed stronger, even as the NGX index trades above the T-line, while other moving averages support an uptrend and recovery move in the face of extreme volatility and fear of a global recession.

The NGX All-Share index action has sustained its crossing of the 52,512.48 basis points level, despite the seeming profit booking, on a very high traded volume and positive market breadth in the midst of dividend hunting and election uncertainties. T6hiscis just as the ‘V’ shaped bullish chart pattern of the market indicates continuation of uptrend or reversal depending on market forces in the new week of policy meeting of central bank of Nigeria.  Any pullback at this level is part of market dynamics that will support the recovery move and create opportunities to buy into value stocks that are yet to move.

To navigate Q1 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 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.”

Meanwhile, oil price continues its oscillation, trading at $87.63 per barrel representing a two-high on China’s economy opening up. Also, there is also the impact of the west enforcing the cap price of Russia’s oil in the midst of fear of recession as another rate hike by the US Federal Reserve Bank and European Central Bank, geopolitical tensions and the ensuing inflation across the globe. Also, there is the supply tightening due to the Russia-Ukraine war that has been lingering for almost a year.  The up and down movement of oil price also continues to drive volatility across the globe.

Movement Of NGXASI

It was a seesaw movement in the week under review, as the benchmark index had three sessions of down market and two days of up market amid selloffs and position taking across some major sectors of the market

Trading for the period started on a negative note, halting the previous gain with a loss of 0.22% was reversed on Tuesday as the index gained 0.67% on buying interests in highly priced stocks. In the process, the index tested 53,737.72bps for that day, but slipped by the midweek, losing 0.16%, which was halted by Thursday when the index closed flat at 0.03%, which it gave up on Friday after shedding 0.13%. This brought the week’s total gain to 0.16%, compared to the previous week’s 2.52%positive close.

Consequently, the key performance NGX All-Share Index inched by 82.20 basis points, closing at 52,594.68bps, compared to the week’s 52,512.48 points opening level, after touching intra week high of 52,737.72 from its lows of 52,329.293points. Similarly, market capitalisation rose by N45bn, representing a 0.16% value gain at N28.65tr, from the previous week’s N28.60tr,

The week top advancers’ table was dominated by low and medium cap stocks, amid mixed sentiments and buying position in dividend paying companies as volatility and portfolio repositioning continued. Also notable is the fact that traders are selling into the up market while investors are taking advantage of price correction in some stocks to buy into value, strong earnings and high dividend yield companies as market recovery persist heading for 53,000 and 54,000 levels.

Market technicals revealed a positive breadth as gainers outnumbered losers in the ratio of 39:30 on a mixed sentiment as indicated by investdata sentiment report showing 65% ‘buy’ volume and 35% sell position. Money Flow Index looking up to 74.48bps, from the previous week’s 68.82points, an indication that funds entered the market on a weekly chart to reflect buying interest in some stocks.

NGX index’s action maintained an uptrend since the golden cross in November, after forming a ‘V’ shape chart pattern on a weekly and daily time frame, despite the seeming profit taking and extreme volatility, as buyers continued to dominate and index trade above the T-line and other moving averages like 20, 50, 100, and 200. Even forming a topping chart at different levels of its recovery move from 43,418.26 that signaled reversal or continuation of trend, depending on market forces, as all eyes are on MPC meeting outcome and 2022 financials that will give direction as trading opens. We note that the volume that supported this recovery and rally remain mixed and above the market’s traded average, just as corporate actions and others could support the uptrend further into early February.

Mixed Sectoral Indices

Sectorial performance indexes for the week closed mixed, as the NGX Insurance and Energy closed higher by in 1.78% and 0.35% respectively, while NGX Banking led the decliners’ after losing 2.60%, followed by Industrial and Consumer Goods with 1.06% and 0.40% respectively.

Activities in volume and value were down, as market players crossed 1.24bn shares worth N15.67bn, compared to the previous week’s 1.29bn units valued at N29.63bn. Volume was driven by Financial Services, Conglomerates and Consumer goods. Specifically, the week’s volume was driven by trades in Veritas Kapital Assurance, Sterling Bank, GTCO, Dangote Sugar and Transcorp.

International Energy Insurance and MRS Oil Nigeria were the best-performing stocks during the week, gaining 28.95% and 13.48% respectively, closing at N0.49 and N16.00 per share on market forces. On the flip side, Livestock feeds and C & I Leasing lost 13.85% and 10% respectively, at N1.12 and N3.15 per share, purely on profit taking and selloffs.

Outlook for the week

We expect a mixed trend and sentiment to continue ahead of policy meeting’s outcome, Q4 GDP and corporate actions. The market index is already eyeing the 53,000 psychological level in the new week. However, retracement to the 51,578.12 level and below is possible on profit taking  as global and domestic events unfold.

Crucial Announcement

As the new year begins, you need to get started with activities that will help you in achieving your goals for the year. To this end, I must tell you that events and activities that happened in 2022 will shape 2023.

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Ambrose Omordion

CRO|Investdata Consulting Ltd

info@investdata.com.ng

ambrose.o@investdataonline.com

ambroseconsultants@yahoo.com

Tel: 08028164085, 08179547605

 

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