NGX Rebounds On Strong Momentum, Improved Liquidity, Positive Q1 Earnings

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It was yet another short trading week on the Nigerian Exchange, with market rally supported by positive momentum and increased buying interests of bargain hunters as revealed by the huge traded volume and positive market breadth. The rebound was attributed to improved liquidity, impressive corporate earnings and actions in form of dividend announcement and payments approved at the recently held Annual General Meetings.
The positive sentiments in some sectors and accumulation of stocks with great value by investors pushing the benchmark NGX All Share Index to a higher close, thereby halting six weeks of pullbacks, despite the price adjustments in the shares of Nestle, Okomu Oil Palm, Total Energies, Berger Paints and Eterna for the dividends recommended by their boards. The NGX traded above the 52,000-basis point mark, to solidify its rebound in the midst of the earnings influx and expected macroeconomic reports ahead of the meeting of the Central Bank of Nigeria’s Monetary Policy Committee (MPC), the last under the Muhammadu Buhari administration, which hands over on May 29 to a new government.
Meanwhile, the market is still expecting the pending 2022 audited accounts of FBN Holdings, SterlingNG, Presco and others, and especially unaudited numbers of March year-end companies. The prevailing low prices of many stocks in the market due to price adjustments that has made many companies attractive for new entry and portfolio repositioning. This is expected of discerning investors amidst the high inflationary environment and contracting economic activities as result of high cost of funds that are impacting negatively on the general economy.
Already, the market has extended its recovery from its oversold state as the NGXASI traded above the T line and 20-Day simple moving average on daily time frame that support uptrend pattern for technical traders and discerning investors. This, however, requires confirmation before players can fully jump into any position, especially as stocks have rallied for some days to witness profit booking, despite the prevailing undervalued state. Also, the market is digesting the Q1 numbers released so far since these earnings reports beat market expectations.
While these earnings are hitting the market, it is better for market players to combine the fundamentals of these companies and their technicals which the charts and volume below represent to guide investment decisions.
Momentum is a word that is used an awful lot when referring to public markets. You hear people talk about “momentum stocks” or how they’re seeing a “momentum shift”. Let us look at the price action below:

NGXASI Weekly Chart (Opening)

NGXBNK Weekly Chart