Positive Sentiment Ahead As Investors Bet On 2023Q1 Earnings Inflow, Low Price Attractions

Market Update for the Week Ended April 20 and Outlook for April 25-28

The nation’s equity market recorded a mixed performance last week, slowing down the declining momentum as investors rekindled their buying interests and portfolio rebalancing on the strength of pending full-year 2022 audited numbers and Q1 scorecards released so far. We note that these numbers offer an insight into where the companies are heading in this new financial year and what investors should expect in the midst of the ongoing economic headwinds and increasing geopolitical tension around the globe.
Meanwhile, market players continued to digest the recent macroeconomic data in the hope of more Q1 corporate earnings report across sectors of the market, which will likely give direction as financial market liquidity is expected to improve on maturity of April bonds and dividend payment by quoted companies. The high interest rates and yield environment in the fixed income market are likely to support flow of funds into risk free assets. But discerning investors and smart traders are taking advantage of the current low prices to position. Just as the upbeat in Transcorp, Accesscorps and other financial services providers’ stocks are likely to continue in the new week, as Q1 numbers from the consumer goods are looking up.
Among corporate earnings released last week were financial institutions- Accesscorp, Wema Bank and NPF Microfinance Bank, which presented their 2022 audited financials. Dividend announcement made included N1.30 from Accesscorp, 30 kobo, as well as 10 kobo respectively from Wema Bank and NPF Microfinance, while Q1 numbers from Accesscorp, Stanbic IBTC, Cadbury and Unilever were impressive, while that of Transcorp Hotel came mixed to kick start the current financial year.
Also last week, the National Bureau of Statistics released inflation data showing a 13 basis points increase to 22.04% in March against February’s 21.91% year-on-year, the highest level since October 2005 when it peaked at 24.56%. This came on the back of below historical average cultivation activities limiting food supply, while food demand was high, pass-through effects of increased transport cost. We expect that purchases during the Easter festivities among Christians and observance of the month of Ramadan festive by Muslims may have increased food demand, impacting short term upward pressure on food prices. We look forward to core inflation moderating in April, given the phase out of election spending and volatility of fuel prices, while all eyes are on the ongoing transition of government amid hopes of reforms, and policy shifts, among others.
Portfolio rebalancing and positive market momentum continue to reflect on the sentiment and market breadth for the period, as more companies’ share prices were adjusted for dividend recommended. They include Africa Prudential, Infinity Trust Mortgage Bank, UBA, Zenith Bank, CWG, Unilever and Seplat for 50kobo, 6kobo, 90kobo, N2.90, 4kobo, 25kobo and 34.67 respectively, coupled with selloffs and profit taking among highly priced stocks like MTNN and other blue chip companies that pulled the market southward. The NGX’s Price-to-Earnings ratio remains relatively low and attractive for investments, following which we foresee a mixed trend in the rest of Q2 and beyond.
To navigate Q2 market volatility and the rest of the year mixed outlook 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 market correction. As volume of transaction witnessed within the week remain above the average traded volume, it is time to go shopping for undervalued stocks, sectors and the next insider playing opportunity.
Oil price during the week, continued its oscillation, as it pulled back to trade at $81.37 per barrel on fear of recession, in the midst of global economic headwinds and rising geopolitical tensions across the globe and supply disruptions due to the Russia-Ukraine war that has lingered for more than a year now, and is indeed escalating. The up and down movement of oil prices also continues to drive volatility across different investment windows.

Movement Of NGXASI
It was a short trading week of mixed sentiment as the NGX index was up for three sessions and one day down that followed holidays to mark Eid el-Fitr, thereby extending the bear transition for the six consecutive week on a high traded volume.
The seeming recovery and consolidation during the period were attributed to the renewed buying interests and reaction to high dividend payout. Alongside buy opportunity presented by price adjustment for dividends. This supported the index’s action recovery on a mixed sentiment, ahead of more corporate earnings that now make the market attractive for technical traders as they keep their eyes on volume, strong support and resistance levels.
Trading for the period started on a negative note, extending the losses recorded in the previous session as the composite NGX All-Share index lost 1.48%, a trend that was halted on Tuesday with marginal gain of 0.03%, this positive outing was sustained at midweek and Thursday as the benchmark index inched up by 0.08% and 0.35% respectively. This brought the week’s total loss to 1.04%, in addition to the previous week’s 2.08% negative position.
Consequently, the key performance NGX All-Share Index lost a total of 538.20 basis points, to 51,355.74bps, from the previous week’s 51,893.94 points closing level. Within the period the index even touched an intra-week low of 51,019.11bps, from its highs of 51,710.82bps. Similarly, market capitalisation fell by N305bn, also representing a 1.08% value loss at N27.96tr, from the previous week’s N28.274tr,
Top gainers chart for the week was dominated by low and medium cap stocks amid positive momentum and mixed sentiment in dividend paying companies as volatility and portfolio repositioning continued. Also notable is the fact that market players were accumulating positions after seeing the audited and Q1 results from different sectors as revealed by volume in some stocks ahead of more Q1 numbers. So buying into value, strong earnings and high dividend yield companies continued, as the market’s recovery and correction persisted, heading for 50,000 and 50,486.74 levels again.
Market technicals revealed a positive breadth as gainers outnumbered losers in the ratio of 35:31 on a mixed sentiment as indicated by investdata sentiment report showing 49% ‘buy’ volume and 98% sell position. Money Flow Index looking down to read 42.78bps, from the previous week’s 50.72points, an indication that funds left the market on a weekly chart to reflect position taking in major stocks and major sectors of the market, in the face of high inflation rate and uptick in fixed income market yields.
The NGX index’s action extended its pullbacks to test the 50 DMA, as it trades below the T line on a very high traded volume to formed a descending triangle or a bearish candlestick that supports a downtrend, which need to be watch in the new week as more financials are expected in the market, despite mixed sentiment witnessed last week.
There were yet position taking as the benchmark index traded slightly above its 50 and 100-Day moving average, even as correction is ongoing in the market, the state of the expected numbers and level of liquidity on payment dates will signal reversal or continuation of trend. This depends on market forces as all eyes are on more financials that will give direction as trading opens on Monday. We note that the volume which supported this correction and pullbacks remains mixed and above the market’s traded average, just as reaction to the expected results and others could support reversal at this level.

Mixed Sectoral Indices
The sectorial performance indexes for the week were mixed as NGX Insurance and Consumer goods closed higher by 1.40% and 0.20% respectively, while the NGX Banking led the decliners’ after losing 2.50%, followed by Energy and Industrial goods with 1.40% and 0.20% respectively.
Transactions in volume and value were up, as investors exchanged 2.82bn shares worth N10.96bn, compared to the previous week’s 1.05bn units valued at N10.05bn. Volume was driven by Conglomerates, Financial services and ICT Industry, boosted by trading Transcorp, Chams, UBA, Fidelity Bank and Zenith Bank.
Transcorp and Ikeja Hotel were the best-performing stocks for the week, gaining 44.97% and 19.83% respectively, closing at N2.45 and N1.39per share on market sentiment and forces. On the flip side, Zenith Bank and Champion Breweries had 12.20%and 10.14% respectively, at N21.95 and N4.43 per share, purely on price adjustment for dividend and selloffs.

Outlook for the week
Being last trading week of the month, we expect positive sentiments on influx of Q1 corporate earnings reports, as market players reacts to these numbers to support the rebound, depending on market forces in the midst of price adjustment and payment dates. Also, all eyes are on incoming government agenda and policies. However, retracement to the 50,578.12 level and below is possible on profit taking as global and domestic events unfold.
Ambrose Omordion
CRO|Investdata Consulting Ltd
Tel: 08028164085, 08179547605