Mixed Sentiments, As Investors Bet On February Inflation Data, Amid Earnings Inflow, Dividend Expectation

Market Update for March 11


The bullish sentiment and positive outings on the Nigerian Exchange continued  for the sixth consecutive session, as the benchmark NGX All-Share index closed on a positive note, amid an improved traded volume and  positive market breadth. There were buying interests across major sectors of the market which is to be expected as more corporate earnings and actions pour in ahead of February Consumer Price Index.

The NGXASI’s action is trading above the T-line, breaking out the psychological line of 102,000 again, as market recovery persists in the midst of higher yields in the fixed income market and ongoing earnings reporting season which has entered its peak with all eyes on financial services providers especially to give direction in the face of rising inflation and FX challenges.

Nigeria’s economic reality continues to reflect on corporate and economic numbers in recent time, especially in the 2023 audited financials released so far that have come mixed and even weak, especially among manufacturing companies revealing the impact of a rash of government and monetary policies on the economy, even as headwinds persist. This arises from foreign exchange hiccups which is putting pressure on the everyday operations of companies and subsequently, their performance following which many are reporting negative earnings, leaving zero rewards for their shareholders.

The NGX continues to receive more notifications for board meetings to approve 2023 audited financials, the latest being from Chemical & Allied Products, May & Baker, among others. While earnings forecast for Q2 were made available by Unity Bank, Trans-nationwide Express, Learn Africa, Consolidated Hallmark and others.  Also, during the session, Insider dealings updates were provided by Transcorp Power, Cutix and others, just as more banks are coming out to announce their primary activities ahead of the sector recapitalization.

The change in trend and improving momentum persists with the index  crossing  the T-Line to gather more strength and surpassed the next  resistance level as the index’s action remain on markup phase. The current state of market has created buy opportunities 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 on companies’ earnings, following the optimism fueled by the belief that the impressive performance from the financial sector among others may impact the market positively.

Monday’s candlestick pattern and formation revealed reversal and continuation of trend which still 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 RSI and top chart pattern that signaled possible reversal.

The momentum indicators signals a weakness in the market, as the ADX continues to look down at 33.51, while RSI and Money Flow Index turn up  to read 60.10 and 47.20 points against the previous session 58.36 and 45.05 points respectively.  As money flow index signal bullish divergence with the index action at the end of midweek trading, which traders should, also watch and trade with caution because funds are in the market is still weak. As trading volume pattern suggests hold and watch disposition of market players, as traders continue to reduce their position in some sectors in the face of others investment windows returns remain below inflation and deprecating 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 was flat to continue its oscillation, as it trades at $82.21 per barrel in the midst of worries about supply from the Middle East ease and china weak data reveals mixed demand outlook for the globe. As US increasing refining capacity in the face of 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.

Trading for the session started in the upside and was sustained throughout the session, despite oscillating on position taking in banking counters and other stocks, while profit taking hit the newly listed transpower and others.  This pushed the NGX’s index to an intraday high of 102,067bps from its lows of 101,330.51bps, before closing above its opening figure at 102,044.84bps.

Market technicals for the session were positive and strong, as volume was higher compared to the previous session in the midst of breadth favoring the bulls on a buying sentiment as revealed by Investdata’s Sentiments Report showing 90% buy position and 10% 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 up at 47.20pts, from the previous day’s 45.05pts, indicating that funds entered  the market.

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Index and Market Caps

At the end of the trading, the NGXASI gained 713.99 basis points, closing at 102,044.84bps after opening at 101,330.85bps, representing a 0.70% growth, just as market capitalization rose by N403.69 billion, closing at N57.70tr from the previous day’s N57.30tr, which also represented a 0.70% appreciation in value.

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.

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The upturn was driven by buying interests in the shares of Zenith Bank, Dangote Sugar, Nascon, UBA, NEM, Aiico, Cornerstone, Wapco and Wema Bank among others, which impacted positively on Year-To-Date gain which inched up to 36.47%. Market capitalization YTD gain stood at N14.42 trillion, representing 41.36% above its opening level for the year.

Bullish Sector Indices

The sectoral performance indexes were in green save for NGX Energy that closed in red with 0.23%, while NGX Banking led the advancers after gaining 2% followed by Insurance, Consumer and Industrial goods with 1.48%, 1.09% and 0.11% respectively.

Market breadth was positive as gainers outnumbered losers in the ratio of 34:16, while activities in volume and value were mixed after investors exchanged 436.90m shares worth N17.10bn. Volume was driven by trades in, GTCO, Transcorp, Accesscorp, UBA and Nascon.

NEM Insurance and Honeywell Flour were the best performing stocks, gaining 10% each, closing at N6.05and N3.74 per share respectively on earnings expectation and  market forces. On the flip side, Prestige Assurance  and Lasaco lost 10% and 9.83% respectively, closing at N0.54 and N2.11per share, purely on selloffs and profit taking.

Market Outlook

We expect a continuation of the mixed sentiments as investors look to February CPI, just as more corporate earnings with dividend are expected to hits the market and investors 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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