Market Update for February 27
The Nigerian Exchange remained upbeat on Monday amid buying pressure on blue chip stocks with historical dividend equalization policy, just as strong earnings power persisted across major sectors of the market. This is coming ahead of more corporate earnings inflow in as citizens await results of last Saturday’s Presidential and National Assembly elections, more than 48 hours after, despite the assurance that the outcome would be transmitted electronically from the various polling units, a promise that has largely been kept in the breach. There is was also reversal in Treasury bill’s rates, as many hope that the result of the presidential election and declaration of a winner would further boost confidence in the medium to long term, as investors bet on dividend announcement at the peak of earnings reporting season.
There is expectation that over 15 big names on the exchange would release their audited accounts for the period ended December 31, 2022 to the market in less than 48 hours, thereby supporting the prevailing strong momentum in the equity space, just like BUA Cement, Dangote Cement, Nigerian Breweries and Nestle Nigeria had declared final dividend of N2.80, N20, N1.03 and N36.50 respectively. Already, many companies have notified the investors of approvals of their 2022 audited results by the board of directors, which have further recommended dividend for the period, following which such results should hit the market any moment from now.
The positive sentiment and increasingly buying interests in low, mid and high cap companies have supported the uptrend as the key performance NGX All-Share index crossed the 55,000 psychological line to close higher on improved traded volume, despite the less than average transaction in the face of positive breadth and markup phase by smart money. Also, the market at this level still offers a ‘buy’ opportunity for income investors as reshuffle their portfolios on the strength of the prevailing high inflation rate of 21.82% and strong momentum behind many of these dividend paying companies.
The market remains above the 55,300 level to trade above the T line on s strong momentum, as repositioning in some companies and sectors that are expected to declare dividend between now and march 31, 2023. The actual state of these audited financials will give a clear direction, just as it may support the continuation of this recovery in the new month as Tuesday is the last trading day of February, notwithstanding uncertainties associated with the 2023 general elections as market players awaits presidential polls outcome.
Technically, the NGX index’s action is on a markup phase which support uptrend after forming cup and handle chart patterns that signals reversal or continuation of trend on a daily and weekly time frame. Just as bullish divergence between the index action and MACD on a dally chart that supports uptrend. Let us keep our gaze on market forces and money flow which is looking up.
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, pulling back to trade at $82.44 per barrel to start the week on fear of recession in the midst of recovery in China economy and rate hike by Fed. Just as attacked on Ukraine is rising even when China is calling peace and ceasefire. This geopolitical tension, high interest and inflation rates across the globe continue to threaten the world. Also, supply tightened due to the Russia-Ukraine war that has lingered so far. The up and down movement of oil price also continues to drive volatility across markets.
Meanwhile, Monday’s trading started on the upside and was sustained throughout the session, on buying interests in blue chip stocks and dividend paying companies, a situation that pushed the NGXASI to an intraday high of 55,334,96 basis points from its lows of 54,941.76bps, before closing above its opening figure at 55,328.42bps.
Market technicals were positive and strong with higher volume of trade, compared to the previous session in the midst of breadth favoring bulls on a positive sentiment as revealed by Investdata’s Sentiments Report showing 98% buy position and 2% sell volume. The total transaction volume index stood at 0.56points, just as energy behind the day’s performance was strong as Money Flow Index looked up at 73.12pts, from the previous day’s 64.54pts, indicating that funds entered the market.
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Index and Market Caps
At the end of Monday’s trading, the NGX All-Share Index gained 379.21basis points, closing at 55,328.42bps, after opening at 54,939.21bps, representing a 0.69% growth, just as market capitalization rose by N206.58bn to cross the N30 trillion mark and closed at N30.14tr from the previous day’s N29.93tr, which also represented a 0.69% appreciation in value.
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Monday’s upturn was driven by accumulation in the shares of Geregu power, Stanbic IBTC, Oando, C & I Leasing, Conoil, NRS Oil, Flourmill, Ikeja Hotel, Accescorp, GTCO, Zenith Bank and Eterna among others, which impacted positively on Year-To-Date gain to 7,96%. Market capitalization YTD gain increased at N2,32tr, representing 7.98% above its opening level for the year.
Bullish Sector Indices
All sectorial performance indexes for the session closed green, led by NGX Consumer goods after gaining 2.39%, followed by Energy, Insurance Banking and Industrial goods with 1.42%, 1.07%, 0.48% and 0.08% respectively.
Market breadth was positive as gainers outnumbered losers in the ratio of 28:9, while transactions in volume and value were mixed, as investors exchanged 149.78m shares worth N1.54bn. Volume was driven by trades in Oando, Transcorp, Fidelity Bank, Chans and UBA.
Stanbic IBTC and Oando were the best performing stocks after gaining 10% each, closing at N37.95 and N4.40per share respectively on impressive earnings Q4 and market forces. On the flip side, FTN Cocoa and UPDC lost 6.90% and 4% respectively, closing at N0.27 and N0.96per share, purely on profit taking.
We expect positive sentiments to continue as market players target dividend paying companies and defensive stocks to protect their portfolios ahead of Saturday elections’ outcome. Any pullback at this point may add more strength to upside potential. As such, investors should take advantage of price correction. Also looking at the trends and events across the globe and domestically.
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