Market Update for March 9
Positioning for dividend on the Nigerian Exchange continued Thursday despite being a mixed session, as the benchmark NGX All-Share index inched up ahead of corporate actions dates for companies that recently released their numbers, and reactions to news of yet another share buy-back by Dangote Cement Plc. With these qualification and markdown dates drawing closer, investors are taking position to benefit from these companies’ payouts.
Buying interests among market players in large cap companies that announced their dividends supported the session’s rebound, even when Treasury Bill’s primary market auction rates adjusted up further in the last offer, as rates moved to 1.44%, 6% and 10% respectively for 91days, 182days and 364 days’ tenors with oversubscription at the end of the offer, a situation that may likely threaten the equity market. Also, plans by the Central Bank of Nigeria (CBN) to raise trillions in this second quarter 2023, may lead to a further spike in stock market volatility.
The NGX index action closed slightly higher, extending previous session’s gains on buying sentiments in the face of high traded volume and negative market breadth. This has consequently signaled a reversal as hammer candlestick formation that supports pullback, which need to be confirm as trading opens this Friday.
Already, many companies have notified investors of their board meetings to approve audited result and recommend dividend for the period, after the unaudited accounts have given investors an insight into what will likely be released as dividend, following which such results should hit the market any moment before the month end.
With the election season gradually winding down, despite the one week shift in the governorship and state assembly elections to March 18, 2023, it is expected that political uncertainties and fear will reduce, since the continuity that supports investment inflow is being built in the midst of an earnings reporting season. As such, it expected that traders and investors will continue to play the market, waiting for the release of more audited results, a situation likely to drive equity prices up and down. Also, it is expected that dividend adjustments and other corporate actions will support oscillation that will create new entrance for market players, especially traders in the post dividend adjustment period which is expected to support positive trend in Q2 all things being equal.
The NGX All-Share index is still heading for the 56,000 basis points mark, while trading slightly above the T line after testing it on a strong momentum, amid repositioning in some companies and sectors expected to declare dividends between now and March 31, 2023. The actual state of these audited financials will give a clear direction, just as it may support the continuation of this recovery in the new month, notwithstanding uncertainties associated with the 2023 general elections.
Technically, the NGX index’s action is on a markup phase which may support uptrend or reversal, after forming a cup and handle chart patterns on a daily and weekly time frame. This signal bearish divergence between the index action and MACD on a dally chart that supports correction. Let us keep our gaze on market forces and money flow which is looking up.
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Oil price oscillation continued, as it pulled back to trade at $81.24per barrel, on US oil drawdown and slow China economic recovery as revealed by latest data in the midst of rate hike by the Feds. Also, the attack on Ukraine is rising even when China is calling for peace and a ceasefire. This geopolitical tension, the prevailing high interest rate regime and soaring inflation across the globe remain potent threat to world peace. Also, supply tightened due to the Russia-Ukraine war that entered into it is first year last week. The up and down movement of oil price also continues to drive volatility across markets.
Meanwhile, Thursday’s trading opened on the upside and was sustained for the rest of the session, despite oscillating on buying interests in highly priced stocks and profit taking especially in energy and financial stocks, a situation that pushed the NGXASI to an intraday high of 55,830.28 basis points from its lows of 55,629.24bps, before closing slightly above its opening figure at 55,822.14bps.
Market technicals were positive and mixed with higher volume of trade, compared to the previous session in the midst of breadth favoring the bears on buying sentiment as revealed by Investdata’s Sentiments Report showing 96% buy position and 4% sell volume. The total transaction volume index stood at 1.16 points, just as impetus behind the day’s performance was strong going by Money Flow Index at 70.16pts, from the previous day’s 60.87pts, indicating that funds entered the market.
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Index and Market Caps
At the end of Thursday’s trading, the composite NGXASI gained 21.00 basis points, closing at 55,822.14bps, after opening at 55,801.14bps, representing a 0.04% up, just as market capitalization rose by N11.4bn to N30.41tr, from the previous day’s N30.40tr, which also represented a 0.04% value gain.
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Thursday’s upturn was driven by demand for shares of GTCO, Dangote Cement, Transcorp, Champion, Chams, Jaiz Bank, CHI Plc and Japaul Gold among others, which impacted mildly on Year-To-Date gain to 8.92%. Market capitalization YTD gain increased by N2.70tr, representing 8.93% above its opening level for the year.
Mixed Sector Indices
Sectorial performance indexes were mixed, as the NGX Industrial and Consumer Goods closed 0.53% and 0.04% higher respectively, while the NGX Energy led the decliners, after losing 2.01%, followed by Insurance and Banking with 0.49% and 0.01% respectively.
Market breadth turned negative, as losers outnumbered gainers in the ratio of 18:11, while transactions in volume and value were mixed after investors exchanged 311,48m shares worth N3.09bn. Volume was driven by trades in Transcorp, GTCO, Zenith Bank, Stanbic IBTC and Sterling Bank.
Transcorp and Royal Exchange Assurance were the best performing stocks, gaining 8.66% and 5.63% respectively, closing at N1.38 and N0.75 per share respectively on earnings expectation and market forces. On the flip side, NCR and Conoil lost 9.93% each, closing at N2.63 and N42,20 per share, purely on selloffs and profit taking.
We expect mixed sentiments and correction after forming a hammer candlestick in an uptrend on high volume, just as investors position for dividend declared in expectation of more financials. Market players target dividend paying companies and defensive stocks to protect their portfolios ahead of the governorship election and post dividend adjustment. Any pullback at this point may add more strength to upside potentials. As such, investors should take advantage of price correction. Also looking at the trends and events across the globe and domestically.
Q2 2023 Investdata Master Class
Theme: Post-Election Investment Opportunities For Consistent Profits In 2023
1. Nigeria: Post-Election Investment Opportunities In Sectors/Industries, Mr Abiola Rasaq, Head Corporate Strategy at CSCS Plc
2. Managing Trade & Investment Risks In A Post-Election Year Using Technical Analysis Tools, Mr Abdul-Rasheed Oshoma Momoh, Head Capital Market at, TRW Stockbrokers Ltd
3. How To Prepare Ahead Of Policy Shifts By Incoming Administration, Alhaji Garba Kurfi MD/CEO APT Securities & Funds Ltd
4. Identifying Changing Post-Election Trends/Patterns For Enhanced Trading Returns, , Mr Ambrose Omordion, CRO. Investdata Consulting Ltd.
This volatile market is not going away any time soon. We have not seen many times like this, since our democratic government started in 1999, especially as the general elections and the post-COVID 19 era have changed the market’s holding structure with domestic investors taking the lead, a situation that has supported today’s trends and patterns. So it is more important than ever to have the best tools and knowledge to benefit most out of this cycle, as the post-election environment once again creates opportunities for money-making moves. That is why I am excited to share something New and Unique in the Q2 Master Class.
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H. 5 Stocks to beat inflation in 2023
“Q2 Master Class 2023 connects you to post-election trade opportunities and ideas to enhance your trading profits
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