Mixed Sentiments May Continue, Amid Bargain Hunting, Positioning As Another Holiday Beckons
Market Update for April 19
It was a positive outing on the Nigerian Exchange at midweek as buying interest was rekindled with increased bargain hunting activities and position taking ahead of more Q1 corporate earnings inflow. With the pending 2022 full year financials being released to the market alongside first quarter numbers, as well as the gradual return of liquidity due to dividend payments. The ongoing plan to reinvest such funds in the market is also expected to give direction as the nation continues another season of transition of government to a new administration amidst the increasing geopolitical tensions across the globe.
Also, the prevailing low prices of many stocks in the market due to price adjustments which has made many companies attractive for new entry and repositioning of portfolios in the midst of high inflation and contracting economic activities as result of high cost of funds that are impacting negatively on the general economy.
This rebound could be sustained if the selling sentiment among the highly priced stocks moderates and liquidity in the market improve further on dividend payment as more and more companies hold their AGM for shareholders to approve payment. Meanwhile, MTNN shareholders have already given approval for payment of the dividend proposed by the board, the bulk of which will likely to be reinvested into the stock or market, especially the by majority foreign core investor.
The NGX All-Share index closed higher on Wednesday, extending its recovery as consolidation already started on a low traded volume and positive market breadth amidst strength returning to market and buying interest in pending 2022 audited financials and Q1 2023 earnings reports. More companies are notifying the NGX of their board meetings and approval of Q1 financials. On Wednesday also, Accesscorp, Wema Bank and Union Bank made available their 2022 audited financials which were mixed in performance as Accescorp and Wema Bank grew their dividend payout, offering N1.30 final and 30 kobo respectively for approval.
The market remained on the decline phase from its overbought state as the All-Share index traded below the 50-Day simple moving average and EMA to signal a bottom reversal pattern for technical traders and discerning investors. This, however, requires confirmation before investors can jump into any position, especially as stocks recently markdown have rebounded on the back of their prevailing undervalued state. Q1 numbers are likely to come predominantly mixed, due to the low economic activities during the period as a result of to cash crunch.
The prevailing dividend yields and low market price to earnings ratio provides better opportunities for discerning investors to hedge against inflation even when fixed income market yields look attractive. There is equally the uncertainty of a rate crash by the incoming government to drive the economy, just as a policy shift may be a plus for equities on a likely financial market and economic reset. Market volatility remains at the extreme on mixed sentiment as T-line stay above the index action ahead of the next market forces, due to the increasing number of companies announcing their board meeting dates to approve Q1 2023 numbers.
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Oil price oscillation continued, as it had further pulled back to trade at $82.00 per barrel in the midst of demand concerns and mixed global macroeconomic data, from the matured economics. Just as attack on Ukraine is rising and geopolitical tension here and there across the globe, the prevailing high interest rate regime and soaring inflation, despite slowing down across the globe remain potent threat to world economy. Also, supply tightened due to the Russia-Ukraine war that entered the second year. The up and down movement of oil price also continues to drive volatility across markets.
Midweek’s trading started slightly in the green and oscillated throughout the session on buying and selling interest among the mid cap stocks and blue chip companies, a situation that pushed the NGXASI to intraday high of 51,209.01 basis points from its lows of 51,138.92ps, before closing marginally above its opening figure at 51,209.01bps.
Market technicals were positive and mixed with lower volume traded, when compared to the previous session in the midst of breadth favoring the bulls on buying sentiment as revealed by Investdata’s Sentiments Report showing 100% buy position and 0% sell volume. The total transaction volume index stood at 0.61 points, just as impetus behind the day’s performance was weak going by Money Flow Index at 30.52pts, from the previous day’s 27.48pts, indicating that funds entered the market.
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Index and Market Caps
The benchmark NGXASI inched up by 70.09 basis points, closing at 51,209.01bps from the 51,134.85bps it opened, representing a 0.08% up, just as market capitalization rose by N17.75 billion to close at N27.87tr, from the previous day’s N28.85tr, which also represented a 0.08% value gain.
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Meanwhile, Wednesday’s session upturn was driven by position taking in the shares of Stanbic IBTC, International Breweries, Transcorp, Eterna, Nahco, Africa Prudential, FBNH, Sterling Bank, NEM Insurance and Academy Press among others, which impacted mildly on Year-To-Date loss that reduce to 0.14%. Market capitalization YTD loss stood at N22 billion, representing 0.16% below its opening level for the year.
Mixed Sector Indices
Sectorial performance indexes were mixed, as the NGX Oil/Gas and Industrial goods closed lover by 1.33% and 0.07% respectively, while NGX Banking led the advancers after gaining 0.77%, followed by Insurance and Consumer goods with 0.66% and 0.08% respectively.
Market breadth turned positive, as gainers outpaced losers in the ratio of 24:8, while activities in volume and value were down after investors exchanged 1.27 billion shares worth N3.87bn, with volume driven by trades in Transcorp, Fidelity Bank, Zenith Bank, GTCO and Dangote Sugar.
Transcorp and International Breweries were the best performing stocks for the day after gaining 9.85% and 6.74% respectively, closing at N2.23 and N4.75per share respectively, on market sentiment and forces. On the flip side, FTN Cocoa and Prestige Assurance lost 3.85% and 2.50% respectively, closing at N0.25 and N0.39per share, purely on selloff and profit taking.
The exchange closes Friday for yet another long holiday to mark the end of the Islamic holy month of Ramadan, we expect mixed trading sentiments to continue as bargain hunting and positioning hit the market on low new attractive price levels, ahead of more Q1 earnings expectation in the midst of price adjustment for dividend and digesting of CPI figure. We note that income investors continue to target dividend paying and defensive stocks to protect their portfolios post-dividend adjustments. 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.
CRO|Investdata Consulting Ltd
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