Market Update for March 21
The seesaw movement resurfaced on the Nigerian Exchange Tuesday, as buying interests in financial stocks weighed positively on the benchmark NGX All-Share Index which closed marginally higher on mixed sentiments. Traded volume was low, just as market breadth turned flat, halting previous day’s loss on a day when the Central Bank of Nigeria’s Monetary Policy Committee once again voted to hike the Monetary Policy Rate by another 50 basis points, leaving it at 18%, as it closed the second meeting for the year. This latest rate increase is expected to impact negatively on the economy and market, amid the lingering cash crunch, and ahead of the fuel subsidy removal by this administration before handing over power to a new administration on May 29, 2023.
In the midst of all these, the nation’s stock market still creates a better opportunity for discerning investors to hedge against inflation even when long-term bond yields look good, but the uncertainty of a rate crash by the incoming government to drive the economy makes the fixed income market risky at this point. This is even as a policy shift may be a plus for the equity market on likely financial market and economic reset that is underway.
As investors and traders digest the outcome of the latest MPC meeting and in the face of more corporate earnings reports expectations, as well as end of quarter window-dressing, and with the election season over the ongoing volatility may linger yet on post-dividend adjustments that will make stocks attractive at low prices. Also, the NGX still trades below the T line on a mixed sentiment.
As the attention of the market shifts to corporate earnings and actions after the MPC meeting, due to the increasing numbers of companies notifying the exchange of their board meetings to approve audited result and recommend dividend, the unaudited accounts published earlier have given investors an insight into what will likely be offered as dividend.
Technically, the distribution phase of the market at this level supports 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, as it rebounded to trade $75.32per barrel, on crude oil inventories build again in the midst of easing banks failure 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.
Meanwhile, Tuesday’s trading opened on the upside and oscillated throughout the session on buying sentiment in financial stocks and profit taking in mid cap companies, a situation that pushed the NGXASI to an intraday high of 54,921.90 basis points from its lows of 54,880.00bps, before closing slightly below its opening figure at 54,904.70bps.
Market technicals were mixed and positive with lower volume of trade, compared to the previous session in the midst of flat breadth and mixed sentiment as revealed by Investdata’s Sentiments Report showing 59% buy position and 41% sell volume. The total transaction volume index stood at 0.62 points, just as impetus behind the day’s performance was weak going by Money Flow Index at 31.17pts, from the previous day’s 30.26pts, indicating that funds entered the market.
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Index and Market Caps
At the end of Tuesday’s trading, the NGX All Share Index inched 18.64 basis points up, closing at 54,904.68bps from the 54,888.48bps it opened, representing a 0.03% up, just as market capitalization rose by N10.16bn to close at N29.91tr, from the previous day’s N29.90tr, which also represented a 0.03% value gain.
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Tuesday’s upturn was driven by demand for the shares of Zenith Bank, Wapco, Vitafoam, Sterling Bank, Fidelity Bank, Jaiz Bank, Champion, Wapic and Linkage Assurance among others, which impacted mildly on Year-To-Date gain to 7.13%. Market capitalization YTD gain stood at N1.94tr, representing 7.15% above its opening level for the year.
Mixed Sector Indices
Sectorial performance indexes were mixed, as the NGX Consumer Goods closed 0.12% lower, while the NGX Insurance led the advancers after gaining 1.30%, followed by Banking and Industrial goods with 0.36% and 0.11% respectively, just as NGX Oil/Gas closed flat.
Market breadth was at par, with gainers and losers in a ratio of 12:12, while activities in volume and value were down after stockbrokers transacted 127.74 million shares worth N1.59bn. Volume was driven by trades in UBA, Transcorp, Fidelity Bank, Zenith Bank and GTCO.
Linkage Assurance and Coronation Insurance were the best performing stocks for the session after gaining 9.76% and 7.89% respectively, closing at N0.45 and N0.41 per share respectively, on market forces. On the flip side, Ikeja Hotel and Cadbury lost 9.65% and 5.83% respectively, closing at N1.03 and N11.30per share, purely on selloffs and profit taking.
We expect the mixed trend to continue as investors digest MPC meeting outcome, ahead of more earnings reports in the midst of quarter end window dressing and price adjustment for dividend. Income investors continue to target dividend paying and defensive stocks to protect their portfolios 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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C. How following Trends and Patterns can boost your trading returns
D. Simple and effective short-term trading strategy you can implement in minutes’ daily
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
G. What can make a pro like you start thinking and trading with confidence
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