Mixed Sentiment To Linger, Amid Earnings Inflow, Dividend Announcements

Market Update for March 4

 The first full trading week of March started on a positive note and mixed sentiments, halting previous session’s loss on improved traded volume but flat market breadth in the midst of inflow of audited earnings with corporate actions. Also, higher and longer yields outlook in the fixed income market due to last week’s rates hike by the Central Bank of Nigeria, continued to pile sell pressure on the equity space.

There is also the prevailing runaway inflation environment as the market enters the peak of the earnings reporting season for December year-end audited accounts, even as corporate and economic data released so far remain weak and mixed, impacting the market and company share prices amid changing market fundamentals and prevailing economic realities.

Today’s economic realities and headwinds are reflecting government policies both at the fiscal and monetary levels, as the mixed macroeconomic indices or reports point to the possibility of a contraction. The Purchasing Managers’ Index for February already shows a slowdown in business activities due to the rising inflation as the purchasing power of Nigerians slip helplessly, as the Naira daily depreciates thereby mounting pressure on production cost. The PMI for February stood at 51.10 points from 54.5 points in January.

More companies, on Monday, presented their audited scorecards with cash and script rewards, despite the mixed numbers, including the NGX Group and NASCON, which posted an impressive performance with a final dividend of 75 kobo and bonus of two new shares for every 100 held respectively. Numbers from African Prudential were weak, but the directors recommended a 45 kobo dividend for the 2023 financial year.

The benchmark NGX All-Share index rebounded marginally on above average traded volume and slight positive market breadth as market players position for dividend and reposition their portfolios. This is expected, amid the changing market fundamentals and mismatch of policies as evidence in the rising macroeconomic headwinds.

The change in trend and momentum persists, as the index trades below the T-Line to gather more strength and surpass the support level that turned resistance as index’s action remain on decline phase. As the current state of market create buy opportunity for position traders ahead of the release of more audited accounts. Market players should watch out for the value areas of resistance and support levels, as more earnings hit the market. The index’s action has displayed a mixed picture as all eyes are company’s earnings, following the optimism fueled by the belief that the impressive performance from the financial sector among others may impact the market positively.

The chart pattern and candlestick formation at the end of the trading session revealed reversal underway which requires confirmation as trading opens this morning at the NGX.  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 index’s action is still relatively strong with bearish RSI and bottom chart pattern that signaled possible reversal.

The momentum indicators signals a weakness in the market, as the ADX continues to look down at 37.93, while RSI and Money Flow Index were mixed to read 50.02 and 35.22 points against the previous session 49.70 and 36.40 points respectively. This should be watch by players as they trade with caution because funds are somewhat in the market. The trading volume pattern suggests hold and watch disposition of market players, as traders reduce position in some sectors in the face of others investment windows returns remain below inflation and falling Naira.

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 on Monday  continue its oscillation, as it trades at $82.44 per barrel in the midst of weak global demand outlook, as the second world largest economy plan to reduce consumption. Just as Middle East conflict and that of Ukraine and Russia war persisted in the face of inflation resurfacing again.  The rising geopolitical tension across the globe is also 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.

Meanwhile, Monday’s trading opened in the upside and it was sustained throughout on position taking and selloffs in low, medium and large cap stocks. This pushed the NGX’s index to an intraday high of 99,290.05bps, from its lows of 98,503.61bps, before closing marginally above its opening figure at 98,847.89ps.

Market technicals for the session were positive and mixed, as volume was higher compared to the previous session in the midst of breadth favoring the bulls on a mixed sentiment as revealed by Investdata’s Sentiments Report showing 44% buy position and 56% sell volume. The total transaction volume index stood at 0.93 points, just as impetus behind the day’s performance was relatively weak as Money Flow Index is looking down at  35.22pts, from the previous day’s 36.40pts, indicating that funds left the market, despite the rebound.

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 Index and Market Caps

At the end of Monday, the composite NGXASI, inched up by 95.91 basis points, closing at 98,847.89bps after opening at 98,751.89bps, representing a 0.10% up, just as market capitalization rose by N1.85tn, closing at N55.89tr from the previous day’s N54.04tr, which also represented a 3.43% appreciation value. This was due to the listing of Transcorp Power’s 7.5 billion shares at N240 per share.

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.

To become a member, send ‘YES’ or ‘STOCKS’ to the phone numbers below. Take advantage of this service to buy right and sell right at the current oscillating market in the midst of earnings season, portfolio reshuffling, and repositioning as we await an economic reform policy that can stimulate and re-track the economy to the path of growth and development.

The upturn was driven by gains in BUA Cement, Wapco, Transcorp, Geregu and newly listed Transcorp Power, among others, which impacted mildly on Year-To-Date gain which inched up to 32.20%. Market capitalization YTD gain stood at N14.23 trillion, representing 36.96% above its opening level for the year.

Bearish Sector Indices

The sectoral performance indexes for the session were in red, save for NGX Industrial goods that closed higher by 1.58%, while NGX Consumer goods led the decliners after losing 1.20% followed by Banking and Insurance with 0.46% and 0.19% respectively.  While NGX Energy finished flat.

Market breadth was slightly positive with gainers outnumbering losers in the ratio of 26:25, while transactions in volume and value were up after players exchanged 429.64m shares worth N19.92bn. Volume was driven by trades in, Transcorp, Transpower, UBA, Aiico and Accesscorp.

Transpower and Transcorp Plc were the best performing stocks, gaining 10% and 9.94% respectively, closing at N264.00 and N15.70 per share respectively on market forces and sentiment. On the flip side, Dangote Sugar and Unity Bank lost 10% each, closing at N53.10 and N1.98per share, purely on selloffs.

Market Outlook

We expect mixed sentiment to continue as  more corporate earnings with dividend hits the market and players take 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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 Theme: Navigating The Stock Market Profitably Amidst Contracting Economy


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  3. Understanding Business Model & Power of Earnings In Equity Price Movement
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Venue : Zoom

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CRO|Investdata Consulting Ltd