Mixed Sentiments May Linger On Profit Taking, Corporate Earnings, Markdown Dates

The increasing buying interest and analysis of the recent better-than-expected corporate earnings on the Nigerian Exchange supported the benchmark NGX All Share index to close higher on Thursday, as bull sentiment resurfaced on an above average traded volume and positive market breadth in the midst of improved economic activities.
We expect the mixed sentiment and recovery in the equity space to continue on the back of positive sentiments in the financial service stocks, blue chip companies and large cap equities on the strength of their impressive Q1 numbers so far, while market players look at fundamentally sound stocks and the prospect considering their sectors and current prices. The prevailing low prices of many stocks due to price adjustments for dividend has made them attractive for new entry and repositioning of portfolios in the midst of high inflation and improving economic activities, despite the high cost of funds.
The positive momentum on the exchange was strengthened on Thursday, amid demands for banking stocks, MTNN and others, a situation that pushed the benchmark All-Share index into green, trading above the T line to test the 20-Day simple moving average and EMA that support uptrend pattern for technical traders and discerning investors. Looking at dividend yields and low market price to earnings ratio that provides better opportunities for investors to hedge against inflation even when fixed income market yields look attractive and remain mixed.
Also, there is the uncertainty of a rate crash by the incoming government, as it moves to drive economic growth and development, even as we note the suspension of plans to remove fuel subsidy and postpone the population census, signaling the possibility of a policy shift. These may be a plus for the equity market on a likely financial market and economic reset. Market volatility remains at the extreme on positive sentiment as T-line turned support for index action ahead of the next market forces and positive statement.
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Oil price oscillation continued, inching up to $73.46 per barrel in the midst of increasing fear of recession and falling crude inventories to track huge weekly loss. Just as Fed had hike rate to 16 years high, even when their economies are contracting in the face Ukraine attack and rising geopolitical tension 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.
Meanwhile, Thursday’s trading opened on the upside and oscillated for the rest of the session on buying interest and profit taking in some high cap stocks, a situation that pushed the NGXASI to an intraday high of 52,308.82 basis points from its lows of 52,207.77ps, before closing slightly above its opening figure at 52,290.75bps.
Market technicals were positive and strong with higher volume traded, when 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 82% buy position and 18% sell volume. The total transaction volume index stood at 1.42 points, just as momentum behind the day’s performance was strong as Money Flow Index reads 70.21pts, from the previous day’s 56.45pts, indicating that funds entered the market.
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Index and Market Caps
The composite NGX All Share Index closed 82.98 basis points up at the end of Thursday, at 52,290.75bps from its 52,207.77bps opening level, representing a 0.16% up, just as market capitalization rose by N45.18bn to close at N28.47tr, from the previous day’s N28.43tr, which also represented a 0.16% value gain.
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Thursday’s upturn was driven by position taking in the shares of MTNN, Ardova, NEM Insurance, UACN, Jaiz Bank, Honeywell and Accesscorp among others, which impacted mildly on Year-To-Date gain as it increased to 2.03%. Market capitalization YTD gain rose to N293bn, representing 2.00% above its opening level for the year.

Bullish Sector Indices
Sectoral performance indexes were in green, except for NGX Consumer goods that closed 0.29% lower, while NGX Insurance led the advancers after gaining 2.08%, followed by Energy, Banking and Industrial goods with 0.78%, 0.76% and 0.02% respectively.
Market breadth was positive, as gainers outpaced losers in the ratio of 32:17, while transactions in volume and value were high after investors exchange 1.27 billion shares worth N7.01bn, with volume driven by trades in Transcorp, Accesscorp, Chams, Zenith Bank and Fidelity Bank.
Mutual Benefits Assurance and NEM Insurance were the best performing stocks for the day, gaining 10% and 9.64% respectively, to close at N0.33 and N4.55 per share, on market sentiment and improved earnings in the sector. On the flip side, Linkage Assurance and Redstar Express lost 9.43% and 8.73% respectively, closing at N0.48 and N2,30per share, purely on profit taking.

Market Outlook
We expect mixed sentiments to continue on profit taking and reaction to corporate earnings ahead of markdown dates, April Consumer Price Index, MPC meeting and dividend payments.
We note that discerning investors have continued to target fundamentally sound companies 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 rally to take profit. Also looking at the trends and events across the globe and domestically.

Ambrose Omordion
CRO|Investdata Consulting Ltd
Tel: 08028164085, 08179547605