Market Update for April 17
The negative outing on the Nigerian Exchange continued Monday to opened the week lower on price adjustments for dividend and selloffs in the shares of telecoms giant MTNN that dragged the market down, thereby extending the bearish stance and the decline phase that creates opportunity for bargain hunters and repositioning which is likely to support rebound of NGX as prices of many stocks at this level look attractive for discerning investors and smart traders.
Despite the seeming low liquidity in the financial market and rising pressure around the prevailing high inflation, interest rates and yields that remain in negative return as march consumer price index hit 18 years high of 22.04% in the face of transitional government that wants to heat up the social political environment with the plan removal of fuel subsidy before handing over to the new government.
Just as the nation’s economic activities continue to contract as revealed by the latest March Purchasing Manager Index report released by Stanbic IBTC showing a further decline to 42.3 basis points, from 44.7 points in February indicating that private sectors businesses had suffered setback for the period, due to the cash crunch, high cost of funds and foreign exchange market hiccups in the face of high rates and inflation.
The key performance NGX All-Share index closed on a bearish note, thereby the extending the bear run for three consecutive sessions on a low traded volume and negative market breadth amidst buying and selling interest in expectation of pending 2022 audited financials and Q1 2023 earnings reports.
On Monday, more companies notified the NGX of their board meeting and approval of Q1 financials, while Transcorp made available its unaudited Q1 2023 results showing mixed performance to start the new financial year, as all eyes are on the coming AGM of the company as new law in the power space create more opportunity for Transcorp.
NGX has confirmed its decline phase from its overbought state as All-Share index trades below the 50-Day simple moving average and EMA to signal a bottom reversal pattern for technical traders and discerning investors. This, however, requires confirmation before investors can jump into any position, especially as stocks recently markdown have rebounded on the back of their prevailing undervalued state. Q1 numbers are likely to come predominantly mixed, due to the low economic activities during the period as a result of to cash crunch.
The prevailing dividend yields and low market price to earnings ratio provides better opportunities for discerning investors to hedge against inflation even when fixed income market yields look attractive. There is equally the uncertainty of a rate crash by the incoming government to drive the economy, just as a policy shift may be a plus for equities on a likely financial market and economic reset. Market volatility remains at the extreme on mixed sentiment as T-line stay above the index action ahead of the next market forces, due to the increasing number of companies announcing their board meeting dates to approve Q1 2023 numbers.
To navigate the rest of the quarter and year 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 pulls back to trade at $85.23 per barrel in the midst of fear of US Fed rising rates and positive China economic growth report as Q1 GDP was up 4.5%.12:31
Monday’s trading started on the downside and it was sustained for the rest session due to markdown in blue chip stocks and selloffs in large cap companies, a situation that pushed the NGXASI to intraday low of 51,095.23 basis points from its highs of 51,710.82ps, before closing sharply below its opening figure at 51,120.94bps.
Market technicals were negative and mixed with lower volume traded, when compared to the previous session in the midst of breadth favouring the bears on a selling sentiment as revealed by Investdata’s Sentiments Report showing 4% buy position and 96% sell volume. The total transaction volume index stood at 0.70 points, just as momentum behind the day’s performance was weak going by Money Flow Index at 31.62pts, from the previous day’s 32.03pts, indicating that funds left the market.
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Index and Market Caps
The benchmark NGX All Share Index, at the end of Monday trading shed 773.07 basis points, closing at 51,120.87bps from the 51,893.94bps it opened, representing a 1.48% decline, just as market capitalization fell by N417.6 billion to close at N27.85tr, from the previous day’s N28.27tr, which also represented a 1.48% depreciation in value.
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Meanwhile, Monday’s downturn was driven by price adjustment and selloffs in the shares of Zenith Bank, UBA, Africa Prudential, Infinity Trust, MTNN, FBNH, Ucap and International Energy among others, which impacted negatively on Year-To-Date as it turned red to 0.24%. Market capitalization YTD loss stood at N24 billion, representing 0.23% below its opening level for the year.
Mixed Sector Indices
Sectorial performance indexes were mixed, as NGX Banking closed 5.53% lower, while NGX Insurance led the advancers after gaining 0.13%, followed by Consumer goods with 0.07%. Just as NGX Energy and Industrial goods were flat.
Market breadth turned negative as losers outpaced gainers in the ratio of 18:16, while transactions in volume and value were down after investors exchanged 225.59m shares worth N1.57bn, with volume driven by trades in Transcorp, Fidelity Bank, SterlingNG, Zenith Bank and UBA.
Ikeja Hotel and Transcorp were the best performing stocks for the day after gaining 9.48% and 9.47% respectively, closing at N1.27 and N1.85per share respectively, on market sentiment and forces.12:31
We expect mixed trading sentiments to continue as bargain hunting and positioning hit the market on low new attractive price levels, ahead of more Q1 earnings expectation in the midst of price adjustment for dividend and digesting of CPI figure. We note that income investors continue to target dividend paying and defensive stocks to protect their portfolios post-dividend adjustments. 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