Market Update for March 4 

Panic selling and profit taking persisted on the Nigerian Exchange Tuesday, following which the benchmark NGX All-Share index broke down the major moving averages to close lower on an above average traded volume and negative market breadth.

Similarly, the global stock market was rattled by trade war fears as U.S tariffs on Canada, Mexico and China kicks off, sending geopolitical tensions and global economic growth uncertainty capable of fueling inflationary pressure across the globe.

Moreover, the corporate earnings released so far and dividend announcements on the NGX are yet to trigger inflow of funds into the equity space as all eyes are still on Wednesday’s Treasure Bill primary market auction holding Wednesday to give more insight.

The extended downtrend is happening in the midst of selloffs hitting some mid to large cap stocks across some major sectors of the market, despite the declining yields in the fixed income market, as dividend payout is seemingly below market expectation, besides failing to give impetus to the market in the midst of the changing market fundamentals. This calls for new strategies to protect capital and profit from the current phase of NGX.

This wave of corrections and funds leaving the market are short-term realities of any market in the world that may be of 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 the two moving averages of 50-EMA and 50-SMA, this indicates the beginning of a markdown phase 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 37.77points, while RSI and Money Flow Index were down at 53.73 and 21.94 points against the previous session’s 59.06 and 29.99 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 Tuesday pulled back to continue its oscillation, as it trades below $70  at $69.85 per barrel in the midst of tariffs driven trade war and  OPEC set to unwind its production cut. As US suspended military aid to Ukraine and EU leaders pushing for Russia-Ukraine peace talk through President Trump. Even as all eyes are on US President Policy uncertainty that 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.

Tuesday’s trading started slightly in the green before pulling back in afternoon and was sustained for the rest of the session, despite oscillating on selloffs in some major sectors to breakdown the psychological line of 107,000 mark, pushing the NGX’s index to an intra-day low of 106,852.30bps from its highs of 107,455.10bps, before closing below its opening level at 106,904.3bps.

Market technicals were negative and weak with higher volume when compared to the previous session in the midst of breadth favoring the bears on a selling sentiment as revealed by Investdata’s Sentiments Report showing 9% buy position and 91% sell volume. The total transaction volume index stood at 0.82points, just as energy behind the day’s performance was weak as Money Flow Index inched lower to read 21.94pts, from the previous day’s 29.99pts, indicating that funds left the market.

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Index and Market Caps

At the close of Tuesday’s trading, the composite NGX All-Share Index shed 550.88 basis points, closing at 106,904.25bps from 107,455.13bps, representing a 0.51% decline, while market capitalization fell by N344.96bn, at N66.94r from the previous day’s N67.29tr, representing a 0.51% depreciation 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 oversold range has increased as market correction and volatility call for intelligent trading and positive chart patterns to be on our watchlist. These stocks have potentials to retrace, considering their earnings prospects and the oscillating moves in a mixed market and recovery 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.

Meanwhile, the downturn was driven by profit taking and selloffs in the shares of Transcorp, Ucap, Africa Prudential, Eterna, Dangote Sugar, ETI and Champion, among others. This impacted negatively on Year-To-Date gain that inched lower to 3.85%, while Market capitalization gain stood at N 6.45tr, representing 6.65% increase over its opening level for the year.

Bearish Sector Indices

Sectoral performance indexes were mixed, with the NGX Insurance and Industrial Goods indexes closing 0.73% and 0.01% higher respectively, while the NGX Banking index led the decliners, losing 1.80%. It was followed by the Consumer Goods and Energy with 0.37% and 0.36% respectively.

Market breadth was negative, as losers outnumbered gainers in the ratio of 43:17, while activities in volume and value were up after investors exchanged 395.47 million shares worth N8.76bn. Volume was driven by trades in Ucap, Ellah Lakes, Zenith Bank, Universal Insurance and Accesscorp.

Union Home REIT and NEM were the best performing stocks after gaining 9.94% and 8.78%, closing at N48.65 and N14.25 per share respectively on the back of sentiment and impressive earnings reports. On the flip side, Guinea Insurance and Dangote Sugar lost 10% each, closing at N0.63 and N36.00per share, purely on profit taking.

Market Outlook

We expect mixed sentiment as market players  continue watch the new phase of NGX as  investors digest latest corporate earnings and corporate actions in the midst of portfolio reshuffling and positioning. 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