NGX Extends Consolidation, Amid Impressive Earnings, Despite Macroeconomic Headwinds

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Nigeria’s stock market extended its consolidation last week on a daily and weekly time frame, trading above the T-line, closing positive, and in the process reversed previous week’s selling sentiment on rekindled buying interests. This is happening in the midst of an earnings reporting season that had been characterised by surprises and disappointing numbers from the different sectors of the market. This is apart from telecoms and ICT companies who’s earnings for the period are expected to give investors an insight into what investors should expect from this sector.
The corporate scorecards made available to the market so far have not mirrored the gloomy economy as much as expected before these actual numbers were released. The services companies, including those in the financial services, have posted unprecedented numbers, while those into manufacturing are reporting mixed performances that reveal the challenges facing the sector. These range from high production and distribution costs, the very volatile foreign exchange market that has driven the cost of raw materials far north, low purchasing power, and the sharp rise in inflation.
Since equity prices feed on corporate earnings in any market cycle, the mixed bag of numbers released within the week come with promises as market players digest these earnings and position accordingly. Historically, earnings seasons come with volatility that create wealth for discerning investors and traders in the market, despite the risk associated with the period.
Understanding these dynamics help investors and traders navigate the season profitably. Let the price actions and chart patterns below guide your entry and exit decisions in the face of influx of earnings reports and reaction next week:

NGXASI Weekly (Opening)

NGX BANKING