Mixed Sentiments Still, As Investors Digest Latest 2022Q4 GDP Data, Ahead Of Weekend Polls

Market Update for February 22

Buying interest on the Nigerian Exchange at the midweek rekindled to wipe away the previous session’s loss, as the heightening anxiety over Saturday’s Presidential and National Assembly elections may have been beclouded by the hope of better than expected corporate earnings. This was just as TB primary market auction rates reversed up across all the tenors to read 3% for 91 days, 3.24% for 182 days and 9.9% for 364days respectively. These rates and yields uptick may not likely affect the equity market in the short-term, due to the ongoing earnings reporting season and dividend expectations of market players at this period considering high dividends of many companies on the exchange and high possibility of dividend growth on the strength of better than expected unaudited earnings released so far.
Also, cautious trading continued amid volatility in the face of Nigeria’s Q4 GDP release which grew to 2.52%, from 2.25% recorded in the Q3 of 2022, but fell by 8.82% to 3.10% year on year from 3.40% in 2021. This deceleration was attributed to decline in agriculture and industrial sector performance over the period, while the performance of the services sector improved in 2022, as the nation’s economy remains on a growth path to reflect the Purchasing Managers’ Index showing expansion in the last quarter of 2022, despite the manufactures confidence dropping to its lowest in 21 months.
The positive sentiment and renewed investors buying interests in mid and high cap companies with history of dividend payment had reversed the previous day’s loss as the benchmark NGX All-Share index to close higher on a low traded volume and positive breadth. Also, the market at this level still creates ‘buy’ opportunity for income investors as reshuffle their portfolios on the strength of the prevailing high inflation rate of 21.82% and strong momentum behind many of these dividend paying stocks.
As all eyes are on the early filers this week to start hitting the market with their 2022 full year scorecards as Africa Prudential board of directors had approved its full year 2022 audited results and dividend at the end of its meeting held on February 21, 2023. This result is expected to hit the market any moment from now. The market remains above the 54,000 marks to trade slightly above the T line on s strong momentum, as 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 bearish divergence between the index action and MACD on a dally chart that supports pullback. Let us keep our gaze on market forces and money flow.
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Oil price oscillation continued, pulling back to trade at $80.73 per barrel, impact of business cycles on oil prices and fear of increase in production output, as recovery in China economy support high demand 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.
Meanwhile, midweek’s trading started slightly in the green and was sustained throughout the session, on buying interest in blue chip stocks and dividend paying companies, a situation that pushed the NGXASI to an intraday high of 54,315.53 basis points from its lows of 54,182.36bps, before closing above its opening figure at 54,315.53bps.
Market technicals were positive and mixed with lower 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 0.47points, just as energy behind the day’s performance was strong as Money Flow Index looked down at 67.46pts, from the previous day’s 84.81pts, indicating that funds left the market, despite the up market.
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Index and Market Caps
At the end of the day’s trading, the NGX All-Share Index gained 126.22basis points, closing at 54,315.53bps, after opening at 54,183.31bps, representing a 0.23% up, just as market capitalization rose by N68.76bn closing at N29.59tr from the previous day’s N29.52tr, which also represented a 0.23% appreciation in value.

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The day’s upturn was driven by accumulation in the shares of Geregu power, Accesscorp, International Energy, University Press, FCMB, Academy Press and Transcorp among others, which impacted positively on Year-To-Date gain to 5.98%. Market capitalization YTD gain increased at N1.87tr, representing 5.98% above its opening level for the year.

Mixed Sector Indices
Sectorial performance indexes for the session were mixed, as NGX Banking and Consumer goods closed higher by 0.25% and 0.01% respectively, while NGX Insurance declined by 0.79%. Just as NGX Oil/gas and Industrial goods were flat.
Market breadth turned positive as gainers outnumbered losers in the ratio of 17:10, while transactions in volume and value were down, as investors exchanged 129.91m shares worth N3.92bn. Volume was driven by trades in Aiico, Zenith Bank, GTCO, Transcorp and Courtville Business Solution.
Geregu Power and John Holt were the best performing stocks after gaining 10% and 9.59% respectively, closing at N246.40 and N1.60 per share respectively on market forces. On the flip side, Wapic Insurance and Royal Exchange lost 6.82% and 6.67% respectively, closing at N0.41 and N0.70per share, purely on selloffs.

Market Outlook
We expect mixed and positive sentiments to continue as market players digest Q4 GDP figure of 3.52% ahead of Saturday 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.
As a result, it is only investors who have improved on their skills and knowledge that will be able to scale through and withstand circumstances beyond their control in the market.
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Ambrose Omordion
CRO|Investdata Consulting Ltd
Tel: 08028164085, 08179547605