Mixed Trends Still, Amid Reactions To Q1 Earnings, Investors Bet On April Inflation Data, MPC Outcome

Market Update for the Week Ended May 5 and Outlook for May 8-12
The first trading week of the month was a mixed performance in the midst of positive sentiment and momentum, increased bargain hunting and portfolio rebalancing on the strength of better than expected Q1 corporate earnings that pushed the market slightly higher while sustaining the recovery and uptrend. We note that these numbers offer an insight into where the companies are heading in this financial year and what investors should expect in the midst of the change of government on May 29, while not forgetting the uncertainty surrounding the local economy and fear of global economic recession on increasing rate hikes.
Meanwhile, market players continued to digest the recent April Purchasing Manager Index report that recovered from 42.7 points in March to 53.8 points to reflect the power of liquidity in the nation economy after cash crunch and Q1 corporate earnings report that came from all the sectors of the market. Also, noteworthy is the fact that discerning investors and smart traders are taking advantage of the current low prices to position after the stocks marked down rebounded sharply, as they offer attractive entry points, just as the upbeat situation in banking stocks, among others is likely to continue in the new week, just as Q1 numbers from the insurance and services sectors are looking up.
Among corporate earnings released last week were one of the pending banking result- SterlingNG presented its impressive 2022 audited financials, offering dividend of 15 kobo, while Q1 numbers from Juli Plc, Africa Alliance Insurance and Omatek Venture showed mixed performance, while Unity Bank and FBNH notified exchange of their delay in filling Q1 2023 financials.
Portfolio rebalancing and positive market momentum continue to reflect on the sentiment and market breadth for the period, as the share prices of more companies were adjusted for dividend recommended. They include NEM Insurance, GTCO, Nascon and GSK for 30 kobo, N2.80, N1.00 and 55 kobo respectively, coupled with selloffs and profit taking among highly priced stocks like Geregu and other blue chip companies that weighed on the market. The NGX’s Price-to-Earnings ratio remains relatively low and attractive for investments, following which we foresee a mixed trend in the rest of Q2 and beyond. Expecting the incoming government to boost confidence with right polices and appointment of economic managers.
To navigate Q2 market volatility and the rest of the year mixed outlook 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 market correction. As volume of transaction witnessed within the week remain above the average traded volume, it is time to go shopping for undervalued stocks, sectors and the next insider playing opportunity.
Oil price during the week, continued its oscillation, as it trades at $75.70 per barrel on fear of recession, in the midst of global economic headwinds and rising geopolitical tensions across the globe and supply disruptions due to the Russia-Ukraine war that has lingered for more than a year now, and is indeed escalating. The up and down movement of oil prices also continues to drive volatility across different investment windows.

Movement Of NGXASI
It was another short trading week of mixed trend and positive sentiment as the NGX index was up for two sessions and down market for two days after the holiday to mark the International Labour Day, thereby extending the bull transition for two consecutive weeks on a very high traded volume.
The seeming recovery and consolidation during the period were attributed to the increased buying interests and reaction to Q1 numbers and high dividend yield. Alongside buy opportunity presented by price adjustment for dividends. This supported the index’s action recovery on a positive sentiment, ahead of more corporate earnings that now make the market attractive for technical traders as they keep their eyes on volume, strong support and resistance levels.
The week’s trading opened on a negative note, halting the gains recorded in the previous session as the benchmark NGX All-Share index lost 0.21%, a trend that was extended at midweek with 0.17% down position, which was reversed on Thursday as the benchmark index inched up by 0.16% and the positive outing was extended to Friday with a gain of 0.33%. This brought the week’s total gain to 0.12%, in addition to the previous week’s 2.04% positive position.
In all this, the composite NGX All-Share Index was up by just 61.80 basis points, to 52,465.31bps, from the previous week’s 52,403.51 points closing level. Within the period the index even touched an intra-week high of 52,469.78bps, from its lows of 52,088.98bps. Similarly, market capitalisation rose by N34bn, also representing a 0.12% value gain at N28.57tr, from the previous week’s N28.53tr,
Top gainers chart for the week was dominated by low and medium cap stocks amid positive momentum and sentiment in dividend paying companies and undervalue stocks as volatility alongside portfolio repositioning continued. Also notable is the accumulation of positions after seeing the audited and Q1 results from different sectors had revealed value in some stocks with strong volume patterns. So buying into value, strong earnings and high dividend yield companies continued, as the market’s recovery and uptrend was sustained, heading for 52,590.45 and 52,886.74 levels again.
Market technicals revealed a positive breadth as gainers outnumbered losers in the ratio of 51:26 on a buying sentiment as indicated by investdata sentiment report showing 99% ‘buy’ volume and 1% sell position. Money Flow Index looking up to read 56.95bps, from the previous week’s 51.08points, an indication that funds entered the market on a weekly chart to reflect position taking in major stocks and major sectors of the market, in the face of high inflation rate and mixed outlook for fixed income market yields.
The NGX index’s action extended its recovery to trade above the 50 DMA and below the T line on a very high traded volume to breakout the downtrend line on a weekly time frame that supports an uptrend, which need to be watch in the new week as pending financials are expected in the market. Just as the candlestick formation indicates that buyers are still in charge.
The buying interest as the benchmark index traded above its 50 and 100-Day moving average, signal presence of institutional investors in the market, as accumulation is ongoing in some stocks and level of liquidity on payment dates will support continuation of trend. This depends on market forces as platers digest financials that will give direction as trading opens on Monday. We note that the volume which supported this recovery and uptrend remains mixed and above the market’s traded average, just as reaction to the expected results and others could support reversal or continuation at this level.

Bullish Sectoral Indices
The sectorial performance indexes for the week were in green led by the NGX Banking which gained 5.23%, followed by Energy, Insurance, Industrial and Consumer goods with 5.08%, 3.08%, 0.09% and 0.02% respectively.
Transactions in volume and value were down, as investors exchanged 2.97bn shares worth N22.83bn, compared to the previous week’s 14.03bn units valued at N59.01bn. Volume was driven by Financial services, Conglomerates and Consumer goods, boosted by trading Transcorp, Accesscorp, Fidelity, Chams and UBA.
CWG and Academy Press were the best-performing stocks for the week, gaining 25.71% and 20% respectively, closing at N1.32 and N1.74per share on market sentiment and forces. On the flip side, Transcorp and McNichols had 30.96%and 17.72% respectively, at N1.94 and N0.65 per share, purely on selloffs.

Outlook for the week
We expect mixed sentiments on profit taking and reaction to Q1 corporate earnings reports, as market players expect these numbers to support the current trend, depending on market forces in the midst of price adjustment and payment dates. Also, all eyes are on April inflation data, MPC meeting and incoming government agenda and policies. However, retracement to the 50,578.12 level and below is possible on profit taking as global and domestic events unfold.
Ambrose Omordion
CRO|Investdata Consulting Ltd
Tel: 08028164085, 08179547605