Market Update for March 20
Monday’s trading activities on the Nigerian Exchange was mixed and volatile, with the benchmark All-Share index closing marginally lower on huge traded volume, driven by a cross deal in Neimeth Pharm, and positive market breadth that halted previous session’s loss. This was just as all eyes are on the outcome of MPC meeting, in the midst of price markdown for dividends and expectation of more 2022 audited financials ahead of quarter end.
The recent global banking nightmare and fear of recession was as a result of an aggressive rate hikes by central banks of the world, which the governments and same central bank of these climates had intervened to stabilize the financial system of that domain.
Back home, the recent macroeconomic indices have revealed a weakened manufacturing sector and declining economic activities in the face of the CBN’s rate hikes for almost one year in the name of checkmating inflation and cash crunch which impacted February’s Purchasing Managers Index at 44.7points from 53.5points in January, while February inflation touched 21.91%, up from 21.82% in the previous month. These are expected to influence the decision of the CBN’s Monetary Policy Committee members as they end their two day meeting on Tuesday, which is mainly whether to keep the benchmark Monetary Policy Rate flat, or adjust it by a moderate 25 or 50 basis points. Anything higher than this will further heat up an economy that is yet struggling.
Notwithstanding the mixed sentiment, the NGX still trades below the T line on buyers and sellers struggling for control in the face of unfolding events locally and globally, creating buy opportunities for players as equity prices remain attractive and undervalued in the midst of expectation of more audited corporate earnings and qualification dates for dividends, as well as price adjustments for dividends announced before the Annual General Meetings where the shareholders will approve for payment, are likely to continue this prevailing volatility.
More companies continue to notify the exchange of their board meetings to approve audited result and recommend dividend for the period, even while the unaudited accounts published earlier have given investors an insight into what will likely be offered as dividend, following which such results should hit the market any moment before the month end.
Technically, the distribution phase of the market at this level support a pullback, after forming a cup and handle chart pattern on the daily and weekly time frame. This signals a bearish divergence between the index action and MACD on a dally chart that supports correction. Let us keep our gaze on market forces and money flow which is looking down.
To navigate the rest of the quarter profitably using fundamental and technical analysis to run, join investdata live sessions at noon every trading day “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 bull-run. Despite the mixed volume pattern witnessed recent days, it is time to go shopping for undervalued stocks, sectors and the next insider playing opportunity.
Oil price oscillation continued, rebounding slightly to $73.28per barrel, on fears of a recession in the midst of bank failures and a mixed outlook of economic recovery in China. Also, the attack on Ukraine is rising even when China is calling for peace and a ceasefire. This geopolitical tension, the prevailing high interest rate regime and soaring inflation across the globe remain potent threat to world peace. Also, supply tightened due to the Russia-Ukraine war that entered into it is first year last week. The up and down movement of oil price also continues to drive volatility across markets.
Monday’s trading started on the upside and oscillated till afternoon before pulling back on selloffs and profit taking in blue chip stocks, a situation that pushed the NGXASI to an intraday low of 54,856.36 basis points from its highs of 54,997.28bps, before closing slightly below its opening figure at 54,888.48bps.
Market technicals were mixed and positive with higher volume of trade, compared to the previous session in the midst of breadth favoring the bulls on a selling sentiment as revealed by Investdata’s Sentiments Report showing 23% buy position and 77% sell volume. The total transaction volume index stood at 5.64 points, just as momentum behind the day’s performance was weak going by Money Flow Index at 30.26pts, from the previous day’s 49.101pts, indicating that funds left the market.
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Index and Market Caps
At the end of Monday’s trading, the composite NGX All Share Index slipped by 46.72 basis points, closing at 54,888.48bps, after opening at 54,935.20bps, representing a 0.09% drop, just as market capitalization fell by N26.79bn to close at N29.20tr, from the previous day’s N29.93r, which also represented a 0.09% value loss.
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Meanwhile, the day’s downturn was driven by profit taking in the shares of Stanbic IBTC, NB, FCMB, Jaiz Bank, Multiverse, Ikeja Hotel and Livestock among others, which impacted negatively on Year-To-Date gain to 7.09%. Market capitalization YTD gain stood at N1.94tr, representing 7.11% above its opening level for the year.
Mixed Sector Indices
Sectorial performance indexes were mixed, as the NGX Banking and Industrial Goods closed 1.30% and 0.06% higher respectively, while the NGX Insurance led the decliners after losing 0.47%, followed by, Consumer goods with 0.36%, just as NGX Oil/Gas closed flat.
Market breadth turned positive, as gainers outnumbered losers in the ratio of 19:14, while transactions in volume and value were up after investors exchanged 1.17 billion shares worth N2.88bn. Volume was driven by trades in Neimeth Pharm, UBA, Accesscorp, Transcorp and Zenith Bank.
Accesscorp and Cutix were the best performing stocks for the session after gaining 7.14% and 5.69% respectively, closing at N9.00 and N2.23 per share respectively on earnings expectation and market forces. On the flip side, Ikeja Hotel and Coronation Insurance lost 9.52% each, closing at N1.14 and N0.38per share, purely on selloffs and profit taking.
We expect the mixed trend to continue as all eyes are on MPC meeting outcome today, just as traders await positive market news and others, ahead of more earnings reports in the midst of quarter end and price markdown for dividend. Income investors target dividend paying companies and defensive stocks to protect their portfolios ahead of the governorship election and post dividend adjustment. 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.
Q2 2023 Investdata Master Class
Theme: Post-Election Investment Opportunities For Consistent Profits In 2023
1. Nigeria: Post-Election Investment Opportunities In Sectors/Industries, Mr Abiola Rasaq, Head Corporate Strategy at CSCS Plc
2. Managing Trade & Investment Risks In A Post-Election Year Using Technical Analysis Tools, Mr Abdul-Rasheed Oshoma Momoh, Head Capital Market at, TRW Stockbrokers Ltd
3. How To Prepare Ahead Of Policy Shifts By Incoming Administration, Alhaji Garba Kurfi MD/CEO APT Securities & Funds Ltd
4. Identifying Changing Post-Election Trends/Patterns For Enhanced Trading Returns, , Mr Ambrose Omordion, CRO. Investdata Consulting Ltd.
This volatile market is not going away any time soon. We have not seen many times like this, since our democratic government started in 1999, especially as the general elections and the post-COVID 19 era have changed the market’s holding structure with domestic investors taking the lead, a situation that has supported today’s trends and patterns. So it is more important than ever to have the best tools and knowledge to benefit most out of this cycle, as the post-election environment once again creates opportunities for money-making moves. That is why I am excited to share something New and Unique in the Q2 Master Class.
Expected Takeaways From This Q2 Master Class
A. Discover how successful traders and investors know the likely market trend and direction
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E. How to quickly identify the best trades and investment opportunities to win 80% of the time
F. The power of economic reforms and technology that drive sector/industry growth
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H. 5 Stocks to beat inflation in 2023
“Q2 Master Class 2023 connects you to post-election trade opportunities and ideas to enhance your trading profits
Don’t miss this session, if you have any exposure to the stock market, either directly or indirectly via managed funds of any kind……
Date: April 1, 2023
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CRO|Investdata Consulting Ltd
Tel: 08028164085, 08179547605