Mixed Sentiments Still, As Investors Crunch 2022Q4 GDP Data, Ahead Of Nigeria’s Make Or Mar Polls

Market Update for February 23

The nation’s stock market on Thursday trades at its 16-year high, breaking out the recent strong resistance levels of 54,290.84 and 54,547.20 on buying pressure ahead of 2022 full-year audited financials inflow in the midst of the uptick noticed in the fixed income market rates and yields. This is also happening at the peak of Nigeria’s general electioneering season, which begins with Saturday’s Presidential and National Assembly polls.
Despite the cautious trading and volatility in the face of market players digesting the latest 2022Q4 GDP data, looking at sectors that served as growth poles, especially the strong prospect that it could continue into Q1 2023, irrespective of the current cash crunch due to the nature of their services and products. The nation’s economy remains on a growth path, confirming the Purchasing Managers’ Index which showed an expansion in the last quarter of 2022, despite the drop in the manufacturers’ confidence to its lowest in 21 months.
That the NGX remains upbeat during this election season is a complete change of patterns in the history of Nigeria’s stock market history in pre-election years and now, a situation attributed to the change in market’s holding structure, post covid 19 impressive corporate performance, impact of newly listed companies and others.
Market trend and performance this time was also a departure from mixed sentiment in the past election years and seasons, especially from 2015 and 2019 elections. The improved local participation of Nigerians, especially institutional investors, high net worth players and savvy retail investors that understand the whole system and perception of government. This is despite the front and back of the market regulators that are not helping matters to protect the retail players in the stock market.
The positive sentiments and buying interests across all classes of stocks with a history of dividend payment had supported the uptrend as the key performance NGX All-Share index to close higher on a less than average traded volume and positive breadth. Also, the market at this level still creates ‘buy’ opportunities for discerning players considering the value and time in achieving your target returns in the midst rising inflation rate of 21.82% and strong momentum behind many of these dividend paying stocks.
As more companies notify the exchange of its board of directors approving their 2022 audited financials and dividend recommendation to signal the release of these results any moment from now. The market remains above the 54,000 marks as it heads to 55.000 psychological line to trade above the ‘T’ line on s strong momentum. The continued repositioning in some companies and sectors that are expected to declare dividend between now and march 31, 2023. The actual state of the audited financials will give a clear direction, just as it may signal the continuation of this recovery in the month of February, notwithstanding uncertainties associated with the coming 2023 general elections.
Technically, the NGX index’s action had signal markup phase which support uptrend after forming cup and handle chart patterns that signals reversal or continuation of trend on a daily and weekly time frame. Just as bullish divergence between the index action and MACD on a dally chart that supports retracement. Let us keep our gaze on market forces and money flow.
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Oil price oscillation continued, as it rebounded to trade at $83.05 per barrel, on expected production cut by Russia, as China secures two long LNG deal with US company in the face of rate hike by Fed and rising attacked on Ukraine. This geopolitical tension, high interest and inflation rates across the globe continue to threaten the world. Also, supply tightened due to the Russia-Ukraine war that has lingered so far. The up and down movement of oil price also continues to drive volatility across markets.
Thursday’s trading opened slightly in the upside which was sustained for the rest the session, on buying interest in high cap stocks and dividend paying companies, a situation that pushed the NGXASI to an intraday high of 54,646.38 basis points from its lows of 54,315.42bps, before closing above its opening figure at 54,646.38bps.
Market technicals were positive and strong with higher volume of trade, compared to the previous session in the midst of breadth favoring bulls on a buying pressure as revealed by Investdata’s Sentiments Report showing 100% buy position and 0% sell volume. The total transaction volume index stood at 0.52points, just as energy behind the day’s performance was strong as Money Flow Index looked down at 65.66pts, from the previous day’s 67.46pts, indicating that funds left the market, despite the up market.
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Index and Market Caps
At the end of Thursday’s trading, the NGX All-Share Index gained 330.85 basis points, closing at 54,646.38bps, after opening at 54,315.52bps, representing a 0.61% growth, just as market capitalization grew by N180.23bn closing at N29.77tr from the previous day’s N29.59tr, which also represented a 0.61% value gain.

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Meanwhile, Thursday’s upturn was driven by position taking in the shares of Geregu power, BUA Foods, MRS Oil, Accesscorp, NGXGroup, Honeywell and Africa Prudential among others, which impacted positively on Year-To-Date gain which rose to 6.63%. Market capitalization YTD gain increased at N1.99tr, representing 6.64% above its opening level for the year.

Bullish Sector Indices
Sectorial performance indexes for the session were in green, led by NGX Consumer goods after gaining 3.78%, followed by Insurance, Banking, Energy and Industrial Goods with 0.40%, 0.39%, 0.39% and 0.06% respectively.
Market breadth turned positive as gainers outnumbered losers in the ratio of 27:9, while transactions in volume and value were mixed, as investors exchanged 145.03m shares worth N1.85bn. Volume was driven by trades in UBA, Courtville Business Solution Zenith Bank, GTCO and Chams.
MRS Oil and BUA Foods were the best performing stocks after gaining 9.88% and 8.78% respectively, closing at N27.50 and N81 per share respectively on impressive earning s and market forces. On the flip side, Neimeth Pharmaceutical and GHI Plc lost 6.45% and 6.15% respectively, closing at N1.45 and N0.61per share, purely on selloffs and profit taking.

Market Outlook
We expect a mixed and positive sentiments to continue as market players digest Q4 GDP figure of 3.52% ahead of tomorrow’s election and uptick in fixed income market rates at the end of the latest TB auction in the midst of corporate earnings expectation, portfolio rebalancing, falling rates and anxiety over the election uncertainty. Any pullback at this point may 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.

Crucial Announcement
As the new year begins, you need to get started with activities that will help you in achieving your goals for the year. To this end, I must tell you that events and activities that happened in 2022 will shape 2023.
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Ambrose Omordion
CRO|Investdata Consulting Ltd
Tel: 08028164085, 08179547605