Market Update for the Week Ended March 4 and Outlook for Mar 7-11
Trading activities on the Nigerian Exchange last week was mixed on panic selloffs and profit-taking, due to the ongoing volatility on the escalating hostilities between Russia and Ukraine which is today a source of serious concern for many investors across the globe. We, therefore, expect mixed sentiments to continue in the new week, as more companies announce their corporate actions, in the midst of profit-taking and buying interests, as market players react to 2021 financials and reposition their portfolios for safety ahead of electioneers activities being a pre-election year.
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Irrespective of the bear resurfacing during the week, the share prices of Seplat and FCMB, among others, hit new 52-week highs.
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Movement Of NGXASI
The NGX All-Share index action had a pullback for the week, after starting on a bullish note for two trading sessions of Monday and Tuesday, before being short-lived at the midweek on panic selloffs that lasted till Friday to resist decline on a low traded volume to halt the previous week positive outing.
The week started on a positive note, gaining 0.12%, an extension of the previous Friday’s buying interest which persisted until Tuesday when the index rose by 0.21%. The trend was halted at the midweek when the market lost 0.24% on panic selling and profit-taking in all classes of stocks, this trend continued on Thursday and Friday after losing 0.14% and 0.06% respectively. This brought the week’s total loss to 0.13%, compared to the previous week’s gain of 0.40%.
In all, the composite index shed 59.81 basis points, closing the week at 47,268.61bps, after touching an intra-week low of 47,202.60 points, from its highs of 47,613.74bps. Recall that the week opened with the index at 47,328.42bps. During the week also, market capitalisation fell by N32bn, closing at N25.48tr, compared to the previous week’s N25.51tr, which also represented a 0.13% value loss.
The week’s top gainers table was dominated by a mix of low, medium and high cap stocks, as demand for dividend-paying stocks continues in the face of panic trading, as players took advantage of the correction to buy into the better-than-expected numbers hit the market. There were also the impacts of sectorial fundamental news as the oil sector became the toast for investors as oil prices remained upbeat.
We note that the NGX Index and price actions reveal selling sentiments, a situation that was reflected in major sectoral indexes that closed lower, due to losses recorded by NGX Group, CAP, Zenith Bank, GTCO, Access Bank, Lafarge Africa, and others that pushed the index higher.
Market breadth for the week turned negative on a low traded volume due to profit-taking, with the onset of corporate actions, leaving investors pleasantly surprised, even as the released numbers have so far given insights into what is expected in terms of dividends. This is likely to support the recovery in the short to long run, while investors increase their positions in the hope of higher dividend payouts and yields, as revealed by numbers and payout announced by directors of Zenith Bank, UBA, GTCO, Dangote Cement, just as fixed income market returns remain negative, despite the recently announced improvement in the inflation rate.
During the week, decliners outnumbered advancers in the ratio of 49:22 on selling sentiments, as revealed by the investor sentiment report showing a 16% ‘buy’ volume and 84% sell position. Money Flow Index inched up at 74.93bps from the previous week’s 68.24 points, an indication that funds enter the market despite closing down.
Despite, the selling sentiment NGX’s index action remained strong and bullish technically on a daily and weekly chart, while momentum indicators were mixed, on a light traded volume, as the NGXASI still trades above the 47,000 points to test 47,613,74 basis points. The candlestick formation, at the end of the week, revealed seller are in charge at a time the release of more 2021 audited financials continues to give direction. The candlestick pattern indicates a possible reversal or continuation of the trend, depending on market forces in the new week. Meanwhile, market recovery is still strong. Also, all eyes are on fixed income market yields and oil prices to further support market fundamentals and attract liquidity to the equity space. The NGX at this point is creating new buying opportunities for dividend income investors.
Bearish Sectoral Indices
The sectorial performance indexes for the week were down, except for NGX Oil/Gas that closed higher by 10.61%, while the NGX Banking led the decliners after losing 2.71%, followed by Consumer, Industrial goods and Insurance with 1.71%, 0.67%, and 0.17% respectively
Activities in volume and value terms were down as players traded 1.37bn shares worth N23.79bn, compared to the previous week’s 1.67.bn units valued at N19.48bn. This volume was driven by Financial Services, Conglomerates and ICT stocks, FCMB, Transcorp, Zenith Bank, Access Bank, and Courtville Business Solution.
Seplat Energy and Linkage Assurance were the best-performing stocks for the week, gaining 20.25% and 16% respectively, closing at N1034 and N0.68per share respectively on oil price rally and market sentiment. On the flip side, RT Briscoe and Learn Africa lost 32.98% and 24,14% respectively, at N0.63 and N1.98 per share, purely on selloffs and profit-taking.
Outlook for the week
We expect positive and bullish sentiments to continue in the new week, as more dividend announcements and audited earnings reports hit the market, in the midst of the positive momentum and profit booking, as investors and traders react to numbers and expected dividend declaration. We note that income investors continue buying into dividend-paying stocks,
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