Mixed Trend Yet, As Investors Realign Portfolios, Bet On Next Week’s MPC Outcome
Market Update for March 16
Selling pressure and profit booking continued on the Nigerian Exchange on Thursday, as the benchmark NGX All-Share index pulled back sharply on selloffs in highly priced stocks and blue chip companies following fear of a banking crisis in advanced economies across the globe, even as normalcy gradually returns on the back of the quick intervention by the various governments and central banks.
The market traded below the T line on panic selling and price adjustment for dividend, creating buy opportunities for players as equity prices moved lower in the midst of an expected catalyst after the elections, and ahead of next week’s two-day meeting of the Central Bank of Nigeria’s Monetary Policy Committee which opens on Monday. Also, investors are digesting the February CPI and the new TB rates after the last primary market auction, as maturing offers provide more liquidity in the system.
The 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.
The NGX All-Share index moved southwards on price declines in selected stocks that weighed on the index on low traded volume and negative market breadth which extended the bear run for the fifth successive sessions. Despite the corrections witnessed on Thursday, there were position taking in the face of the selling sentiments, as more companies continued to notified the exchange of their board meetings to approve audited result and recommend dividend for the period, after the unaudited accounts have given investors an insight into what will likely be released 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 as it rebounded slightly to trade at $74.95per barrel, on fear of recession in the midst of banks failure and slow 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, Thursday’s trading opened on the downside and it was sustained throughout the session, despite oscillating on buying interests in few stocks, selloffs in MTNN and others, a situation that pushed the NGXASI to an intraday low of 54,844.30 basis points from its highs of 55,490.20bps, before closing below its opening figure at 54,915.60bps.
Market technicals were negative and mixed with lower volume of trade, compared to the previous session in the midst of breadth favoring the bears on a selling sentiment as revealed by Investdata’s Sentiments Report showing 11% buy position and 89% sell volume. The total transaction volume index stood at 0.77 points, just as energy behind the day’s performance was relatively strong going by Money Flow Index at 54.66pts, from the previous day’s 59.371pts, indicating that funds left the market.
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Index and Market Caps
At the close of Thursday’s trading, the composite NGX All Share Index, lost 574.59 basis points, closing at 54,915.60bps, after opening at 55,490.20bps, representing a 1.04% decline, just as market capitalization fell by N313.02bn to close at N29.29tr, from the previous day’s N30.23r, which also represented a 1.04% value loss.
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The downturn was driven by selloffs in the shares of MTNN, ETI, Accesscorp, Cutix, Ucap and Transcorp among others, which impacted negatively on Year-To-Date gain to 7.15%. Market capitalization YTD gain stood at N2.04tr, representing 7.17% above its opening level for the year.
Bearish Sector Indices
Sectorial performance indexes were down, except for the NGX Oil/Gas that closed flat, while the NGX Banking led the decliners, after losing 1.00%, followed by Insurance, Consumer and Industrial goods with 0.36%, 0.17% and 0.10% respectively.
Market breadth was negative, as losers outnumbered gainers in the ratio of 25:7, while transactions in volume and value were down after investors exchanged 137.29m shares worth N1.51bn. Volume was driven by trades in Transcorp, Zenith Bank, Sterling Bank, UBA and Accesscorp.
The best performing stocks for the session were Chams and University Press which gained 8.70% and 7.57% respectively, closing at N0.25 and N1.99 per share respectively on market forces. On the flip side, ETI and IMG lost 10% and 9.32% respectively, closing at N10.80 and N7.30per share, purely on profit taking and selloffs.
We expect the mixed trend to continue as players digest CPI data and TB rates ahead of MPC meeting and more more earnings reports in the midst 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.
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