Mixed Trends Still Amid Profit-Taking, Price Adjustments For Dividends, Ahead Of Guber Polls

Market Update for the Week Ended March 10 and Outlook for March 13-17

There was mixed trading last week on the Nigerian Exchange amidst profit taking and dividend positioning, but it closed higher on buying sentiments and strong momentum that extended the uptrend for a third consecutive week on mixed volume patterns reflecting market reactions to the results pouring in from early filers and their dividend declaration ahead of next weekend’s governorship and House of Assembly elections and the uncertainties associated with the process so far.
All eyes are still on macroeconomic data released so fr, especially the Consumer Price Index for the month February, in the face of expected release of more full-year financials and price adjustments for dividends. Already, most of the listed companies have notified the exchange of board meetings to approve their 2022 financial and dividend recommendation.
These are likely to drive another mixed trend in the new trading week ahead of Saturday’s elections. A pullback at this point will create opportunities for investors to accumulate more dividend paying stocks, while we expect traders to take advantage of the correction by positioning for the 2023 Q1 earnings and change of government in the second quarter.
With the relative peace in the system today and election season gradually coming to an end, as aggrieved parties head to court, the post-election trends and patterns guide market players to position in sectors. There is also expectation of changes in the nation’s economic managers and policy shifts that would drive positive economic growth and development needed to impact market and sectoral performance, going into the future. It is noteworthy that the NGX’s Price-to-Earnings ratio remains relatively low and attractive for investments, following which we foresee a positive trend in the market from Q2 and beyond.
The mixed sentiment and portfolio repositioning in the midst of the uptick in fixed income market yields and profit taking, as NTB auction offer rates moved to 1.44%, 6% and 10% respectively for 91 days, 182 days and 364 days tenors, while Monetary Policy Rate and inflation stood at 17.5% and 21.82% respectively. Investors are looking forward to inflation data for February any moment from now, which is already projected to slow down to 21.15%, due to cash crunch and low business activities during the period.
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Oil price during the week continued its oscillation, to hit 2 weeks’ low, despite the seeming rebound to trade at $82.78 per barrel as OPEC production drop in the face of Russia cutting production 50,000. Even as some senators in US threatened to block Biden nominees over IRA energy provisions. Just as China economy recovery is slow and strong dollar could trigger recession due to rate hike in US and others climates as a result of inflation uptick across the globe. We note also the geopolitical tensions and supply tightening due to the Russia-Ukraine war which has lingered for more than a year and escalating. The up and down movement of oil price also continues to drive volatility across the globe.

Movement Of NGXASI
The NGX index’s action during the week recorded a mixed trend of positive outing, with two days of down market and three up sessions, owing to profit taking and buying interests in dividend paying stocks ahead of qualification and markdown dates. This pushed the index towards the 56,000 level to test 55,985.47 basis points on a mixed sentiment, ahead of more corporate actions that now make the market attractive for dividend income investors.
The week’s trading started on a positive note, halting the loss recorded in the previous session as index gained 0.14%, a trend that slowed down on Tuesday when the market shed 0.003%, but retraced up by 0.35% at midweek’s session. This situation was sustained on Thursday with marginal gain of 0.04%, and then pulled back on Friday by 0.23%, bringing the week’s total gain to 0.48%, in addition to the previous week’s 1.06% positive position.
In all, the benchmark NGX All-Share Index gained 265.30 basis points, closing at 55,794.51bps, compared to the week’s 55,529.21 points opening level, after touching an intra-week high of 55,730.28bps, from its lows of 55,515.15points. Similarly, market capitalisation rose by N145bn, also representing a 0.48% value gain at N30.40tr, from the previous week’s N30.25tr,
The week’s top gainers chart was dominated by low, medium and high cap stocks amid profit booking and buying sentiment in dividend paying companies as volatility and portfolio repositioning continued. Also notable is the fact that market players were accumulating positions after seeing the unaudited results from different sectors ahead of their corporate actions. So buying into value, strong earnings and high dividend yield companies continued, as the market’s recovery persisted, heading for 56,000 and 56,118.81 levels.
Market technicals revealed a negative breadth as decliners outnumbered advancers in the ratio of 41:22 on a mixed sentiment as indicated by investdata sentiment report showing 89% ‘buy’ volume and 11% sell position. Money Flow Index looking up to 90.65bps, from the previous week’s 90.47points, an indication that funds entered the market on a weekly chart to reflect buying interest in some stocks and major sectors of the market, despite selloffs and uptick in fixed income market rates.
The NGX index’s action maintained its bullish rally, despite profit taking and election ahead of a major resistance levels of 55,984.48 and 56,000 mark on more financials, as market players look forward to a financial market, economic and political reset that will drive higher returns in 2023 and beyond. Just as the ‘V’ shape chart pattern on a weekly time frame, indicates continuation of trend or reversal due to profit taking and extreme volatility.
Despite the seeming selloffs, position taking remained dominant as the index traded above the T-line and other moving averages like 100, and 200, even forming a topping chart at different levels of its recovery move from 43,418.26 that signaled reversal or continuation of trendw. This depends on market forces as all eyes are on 2022 financials that will give direction as trading opens on Monday. We note that the volume which supported this recovery and rally remains mixed and above the market’s traded average, just as corporate actions and others could support the uptrend further into early March

Mixed Sectoral Indices
The sectorial performance indexes for the week were mixed, as NGX Industrial goods and Insurance closed higher by 1.71% and 0.70% respectively, while the NGX Oil/Gas led the decliners’ after losing 3,82%, followed by Banking and consumer goods with 1.82% and 0.26% respectively.
Transactions in volume and value were mixed, after market players executed 1.02bn shares worth N20.22bn, compared to the previous week’s 1.91 billion units valued at N18.44bn. Volume was driven by Financial Services, Conglomerates and Industrial goods, boosted by trading Transcorp, GTCO, BUA Cement, Chams and Sterling Bank.
Julius Berger and Trans-Nationwide Express were the best-performing stocks during the week, gaining 10% and 9.88% respectively, closing at N26.95 and N0.89per share on earnings expectation and market forces. On the flip side, MDS Oil and Conoil had 18.99%and 18.89% respectively, at N27.95 and N38.00 per share, purely on profit taking.

Outlook for the week
We expect a mixed trends and sentiments to continue as traders book profit, equity price adjustment for dividend announced, just as market players await next Saturday’s governorship election outcome and uptick in rates and yields in fixed income as more companies’ earnings reports are expected to roll in this week. The market index is already eyeing the 56,000 psychological level in weeks to come. However, retracement to the 53,578.12 level and below is possible on profit taking as global and domestic events unfold.
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
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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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CRO|Investdata Consulting Ltd
Tel: 08028164085, 08179547605

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