Market Update for March 28
It was a mixed session on the Nigerian Exchange on Tuesday, as selling sentiments continued on price adjustments for dividend and selloffs among highly priced stocks, a situation that further dragged the market south, forcing the benchmark NGX All-Share Index to close lower on a less than average traded volume. Market breathe was however positive, as the bear run continued for the fourth successive session, as the long awaited corporate earnings and dividend announcement, especially from first-tier banks had started rolling in, offering the market some stability ahead of Q2 portfolio reshuffling.
The market continues to trade below its 50-Day Simple Moving Average and EMA at the close of Tuesday, signaling a markdown phase that creates opportunity for technical traders, as of the March 31 deadline for submission of the December year-end earnings reports draws even closer. There is also the quarter-end window dressing and positioning for Q2 trading on the strength of expected 2023 Q1 earnings reports, even when it seems likely to be mixed numbers for Q1 as a result of low economic activities due to cash crouch.
Meanwhile, PZ release an impressive Q3 result, while the full-year audited earnings from Zenith Bank came mixed to the market, with the directors offering a final dividend of N2.90 per share, in addition to the overdue results from Oando Plc which were expectedly mixed in performance. Meanwhile, the increasing 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 mixed. There is however the uncertainty of a rate crash by the incoming government to drive the economy, just as a policy shift may be a plus for the equities on a likely financial market and economic reset.
Despite the ongoing extreme volatility, the NGX still trades below the T-line on a selling sentiment, even as attention is shifting to corporate earnings, due to the increasing number of companies announcing their board meeting dates to approve audited results and recommend dividend. Also, the unaudited accounts published earlier have given investors an insight into what will likely be offered as dividend.
Technically, the decline phase of the market at this level supports an uptrend if the coming financials, especially from first-tier banks beat expectations, after the market had rallied for four months as revealed by price actions, an indication of a bearish divergence between the index action and MACD on a dally chart that supports a correction. Let us keep our gaze on market forces and money flow which is looking down.
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, rebounding powerfully to trade at $78.62 per barrel on US crude oil inventories fall in the midst of continued rate hikes that had led to banks failure in Western world and higher demand as China economic recovery expand. Also, the attack on Ukraine is rising even when China is calling for peace and a ceasefire. This geopolitical tension, the prevailing high interest rate regime and soaring inflation across the globe remain potent threat to world peace. Also, supply tightened due to the Russia-Ukraine war that entered into it is first year last week. The up and down movement of oil price also continues to drive volatility across markets.
Meanwhile, Tuesday’s trading stated slightly on the downside and oscillated throughout the session on position and profit taking, a situation that pushed the NGXASI to an intraday low of 53,498.27 basis points from its high of 53,876.52bps, before closing below its opening figure at 53,498.27bps.
Market technicals were positive and mixed with higher transaction volume, compared to the previous session in the midst of breadth favouring the bears on a selling pressure as revealed by Investdata’s Sentiments Report showing 0% buy position and 100% sell volume. The total transaction volume index stood at 1.02 points, just as impetus behind the day’s performance was weak going by Money Flow Index at 26.50pts, from the previous day’s 31.39pts, indicating that funds entered the market, despite closing lower.
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Index and Market Caps
Trading ended with the benchmark NGX All Share Index shedding 252.50 basis points, to close at 53,498.27bps from the 53,750.77bps it opened, representing a 0.47% decline, just as market capitalization fell by N128.54bn to close at N29.14tr, from the previous day’s N29.28tr, which also represented a 0.47% value loss.
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Tuesday’s slide was driven by selloffs in the shares of Dangote Cement, Ucap, Dangote Sugar, UACN and Fidson among others, which impacted negatively on Year-To-Date gain which reduce to 4.38%. Market capitalization YTD gain stood at N1.34tr, representing 4.39% above its opening level for the year.
Bullish Sector Indices
Sectorial performance indexes were mixed, save for NGX Industrial goods that closed lower by 2.18%, while NGX Consumer goods led the advancers after gaining 1.50%, followed by Insurance and Banking with 0.46% and 0.27% respectively.
Market breadth turned positive as gainers outpaced losers in the ratio of 17:9, while transactions in volume and value were mixed after investors exchanged 202.85m shares worth N2.05bn, with volume driven by trades in Transcotps, Fidelity Bank, Custodian, Sterling Bank and GTCO.
PZ and International Energy Insurance were the best performing stocks for the day after gaining 9.62% and 9.24%, closing at N11.40 and N1.30 per share respectively, on impressive Q3 earnings report and market forces. On the flip side, Chams and UACN lost 8.00% and 5.76% respectively, closing at N0.23 and N9.00per share, purely on selloffs and profit taking.
We expect improved sentiments and mixed trend as players analyze recent earnings that hit market, ahead of more earnings reports in the midst of expected quarter end window dressing and price adjustment for dividend. 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.
Q2 2023 Investdata Master Class
Theme: Post-Election Investment Opportunities For Consistent Profits In 2023
1. Nigeria: Post-Election Investment Opportunities In Sectors/Industries, Mr Abiola Rasaq, Head Corporate Strategy at CSCS Plc
2. Managing Trade & Investment Risks In A Post-Election Year Using Technical Analysis Tools, Mr Abdul-Rasheed Oshoma Momoh, Head Capital Market at, TRW Stockbrokers Ltd
3. How To Prepare Ahead Of Policy Shifts By Incoming Administration, Alhaji Garba Kurfi MD/CEO APT Securities & Funds Ltd
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This volatile market is not going away any time soon. We have not seen many times like this, since our democratic government started in 1999, especially as the general elections and the post-COVID 19 era have changed the market’s holding structure with domestic investors taking the lead, a situation that has supported today’s trends and patterns. So it is more important than ever to have the best tools and knowledge to benefit most out of this cycle, as the post-election environment once again creates opportunities for money-making moves. That is why I am excited to share something New and Unique in the Q2 Master Class.
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