Taking Market Update for March 1The positive sentiment and volatility in the past two months continued on the Nigerian Exchange on Tuesday, as trading for the new month opened on a positive note. The composite NGX All Share index extended its bullish transition for the fourth successive session on a very high trade volume in the midst of negative breadth and influx of 2021 audited financials with corporate actions.
Despite the recent impressive scorecards and payouts from Seplat, Zenith Bank, Dangote Cement, Lafarge Africa and others, the market witnessed a mixed sentiment as a result of profit taking activities of traders and investors running for safety amid the geopolitical tension in Eastern Europe that has triggered a rise in commodity prices, with oil trading above $105 in the international market. This spells trouble for Nigeria, despite being a member of OPEC due to her total reliance on import for petroleum products, as four refineries remain comatose. For weeks now, scarcity of premium motor spirit or petrol has plagued the country, pushing cost of transportation and food items higher. Nevertheless, the movement in oil prices can support the positive economic trends and market fundamental, as oil and energy sectors benefit as oil prices hit a 9-year high.
The trading pattern on Tuesday in the midst of corporate actions and better than expected numbers call for caution, as the NGX index action broke out its strong resistance level to test 47,613.70 and pullback on high volume, but continue trading above the 47,000 mark, ahead of more 2021 full year audited results.
We expect market volatility to continue in the midst of this earnings reporting season, providing opportunities for the buy and sell side of the market. But it is more important than ever to get good clear concise information to help firm up your trading and investing plans as the market awaits big names to release their corporate earnings and actions as a push for positive reversal.
With all this in mind, I want to personally invite you to join me live today at Investdata Trading Academy with Ambrose every trading day at noon to get the real live position of the market and direction of individual stocks on exchange. This is necessary to help you make investment decisions at any point. Here, we advise you either as investors and traders to allow their stop-loss and profit targets guide you, while removing every atom of emotion.
Technically, the NGX’s index action remains bullish in the face of buying interests and profit taking in low, medium and high cap stocks, which signals a gradual change in momentum and trend, as indexes and other indicators remain bullish, looking in the same direction on a high traded volume. Investors need to watch this, as funds are entering the market as expected, while traders should take advantage of any pullback at this point to position. Trade metrics for the session revealed profit-taking and accumulation of positions, ahead of fundamental news of dividend, among others hitting the market any moment from now.
Meanwhile, stocks like Seplat, Niger Insurance, Royal Exchange Assurance, FCMB among others hit their new 52-week highs at the close of Tuesday . At the end of trading, candlestick formation showed the possibility of reversal and sellers at work. The mood of the market when it opens Wednesday morning will confirm direction as the NGX index trades on top of the shortest moving averages and above the 20, 50 and 200-Day. Momentum indicators are looking up, as the ADX reads 63.00. The RSI closed above 50 at 74.25 and Money Flow Index inched up to 74.02 points on the daily time frame. The continuation of this trend depends largely on the interplay of market forces and flow of funds, as direction of fixed income market yields remains unclear with TB rates declining further.
Tuesday’s trading started slightly on the upside and was sustained throughout the session despite oscillating on buying interests and selloffs, a situation that pushed the NGX index to an intraday high of 47,613.70 basis points, from its lows of 47,358.48bps. Thereafter, the market closed above its opening point at 47,482.48 bps.
Market technicals were positive and mixed, as volume traded was higher than in the previous day amidst the breadth favouring bears on a mixed sentiment as revealed by Investdata’s Sentiment Report showing 49% buy volume and 51% sell position. The total transaction volume index stood at 1.18 points, just as momentum behind the day’s performance remained relatively strong. Money Flow Index was up at 74.02 points, from the previous day’s 73.57 points, indicating funds entered the market slightly. For you to successfully invest and trade in this market, order for Investdata’s video on Buy & Sell Technical Analysis Toolbox to navigate the volatile market profitably, enhance trading decisions and boost your bottom line. Also, to up your game in stock trading and investing, understanding the key to trading price and index action will go a long way to make the difference in your trading results, check out the video materials below.
Index and Mkt Cap Movement
The key performance index NGXASI, at the end of the day’s trading gained 88.20 basis points at 47,482.73bps, after opening at 47,394.53bps, representing a 0.20% up, just as market capitalization rose by N58bn closing at N25.59tr, from the opening value of N25.56tr, also representing a 0.20% value gain.
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Bearish Sector Indices Performance indexes across the sectors were down, except for the NGX Oil/Gas index closed higher by 5.36%, while NGX Insurance led the decliners after losing 1.32%, followed by Banking. Industrial and consumer goods with 0.75%, 0.27% and 0.17% respectively.
Market breadth turned negative as losers outnumbered gainers in the ratio of 20:15, while activities in volume and value terms were up, after stockbrokers traded 370.54m shares worth N7.85bn, compared to previous day’s 310.54m units valued at N2.77bn. Volume was boosted by trades in FCMB, Transcorp, Zenith Bank, MTNN and Niger Insurance.
Seplat Energies and Royal Exchange were the best performing stocks for the day, gaining 9.99% and 9.49% respectively, closing at N945.80 and N1.50per share on market sentiment for oil stocks and market forces. On the flip side, Cutix and Learn Africa lost 10% and 9.96% respectively, closing at N2.43 and N2.35 per share, on selloffs and profit taking.
We expect a mixed trend on investors’ reactions to corporate action and profit taking ahead of the release of more 2021 audited financials with dividend announcement to boost positive vibes during this earnings season and rallying oil prices as it trades at $105pb. Just as market interpret the positive economic data in relationship with oil price and other factors, in the midst of profit-taking and portfolio rebalancing. This is will result in market players targeting fundamentally sound and dividend paying stocks in hope of dividend announcements, as inflation rate moderates at 15.60% and Q4GDP up at 3.98%, while the International Monetary Fund is calling for hike in interest rate and further devaluation of Naira.
Market players continue to digest the quarterly and unaudited 2021 full-year results available in the market and what is happenings in fixed income market after the NGX index pulled back slightly to trade above its 50-Day Moving Average on a low sell volume in the face of assets rebalancing and the changing patterns in February as the investors look forward to more audited 2021 earnings reports. The relatively high volume traded in the midst of volatility and recovery moves are creating new buy opportunities on the strength of corporate numbers and economic data. Also, candlestick formation and volume traded during the session shows that institutional players are not buying yet. It is equally noteworthy that during a ranging market many players sit on the fence waiting for a breakout, or down before jumping into any position. Even so, many stocks are trading within their buy ranges, a situation expected to attract more funds into the stock market, given the Dividend Yield capable of serving as a hedge against inflation.
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