Market Update for March 6
The benchmark Nigerian Exchange’s All-Share index inched up on Monday to start the week on a positive note, thereby halting Friday’s loss on a less than average traded volume and negative market breadth, in the face of the increasing buying interest in expectation of an inflow of more audited financials and corporate actions in form of dividend announcements. Also, the market seem to be ranging in expectation of a trigger in the form of information, or economic data as revealed by candlestick formation at the end of the day’s trading, signaling the possibility of a breakout or pullback.
The mixed sentiment as market players reacted to the numbers released so far and of portfolio realignments on the strength of sound fundamentals and prospect of stronger earnings growth in these companies. This has continued to support the prevailing strong momentum in the equity space.
Already, many companies have notified the investing public of their board meetings to approve audited result and recommend dividend for the period, after the unaudited accounts had given investors an insight into what is likely to come as dividend, following which such results should hit the market any moment before the month end.
As the election season is gradually winding down, it is expected that political uncertainties and fear will reduce, as continuity that supports investment inflow is being built in the midst earnings reporting season, so traders and investors will continue to play the market waiting for more results to hit the market, which is likely to drive equity performance. Also, it is expected that dividend adjustments and other corporate actions will support volatility that will create new entrance for market players, especially for traders in the post dividend adjustment period which is expected to support positive trend in Q2 all things being equal.
The NGX All-Share index remains on the sideways movement heading for the 56,000 basis points mark, while trading above the T line on a strong momentum, amid repositioning in some companies and sectors expected to declare dividends between now and March 31, 2023. The actual state of these audited financials will give a clear direction, just as it may support the continuation of this recovery in the new month, notwithstanding uncertainties associated with the 2023 general elections.
Technically, the NGX index’s action is on a recovery or markup phase which may support an uptrend, after forming cup and handle chart patterns that signal a reversal or continuation of trend on a daily and weekly time frame. This is aside the bullish divergence between the index action and MACD on a dally chart that supports an uptrend. Let us keep our gaze on market forces and money flow which is looking flat.
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Oil price oscillation continued, as it rebounded to trade at $86.28 per barrel, even as US call for higher global oil production to meet the rising demand, as China economic recovery continue in the midst of rate hike by the Feds. 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, Monday’s trading opened on the upside but oscillated for the rest of the session to rebound on position taking in highly priced stocks and blue chip companies, a situation that pushed the NGXASI to an intraday high of 55,645.51 basis points from its lows of 55,515.15bps, before closing above its opening figure at 55,605.57bps.
Market technicals were mixed and positive with lower volume of trade, compared to the previous session in the midst of breadth favoring bears on a mixed sentiment as revealed by Investdata’s Sentiments Report showing 69% buy position and 31% sell volume. The total transaction volume index stood at 0.47 points, just as energy behind the day’s performance was strong going by Money Flow Index at 67.05pts, from the previous day’s 73.24pts, indicating that funds left the market, despite inching up to close in green.
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Index and Market Caps
At the close of Monday’s trading, the composite index NGXASI gained 76.36 basis points, closing at 55,605.57bps, after opening at 55,529.21bps, representing a 0.14% up, just as market capitalization rose by N41.6bn to N30.29tr, from the previous day’s N30.25tr, which also represented a 0.14% value gain.
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Monday’s upturn was driven by demand in the shares of Julius Berger, Dangote Sugar, Nahco, UCap, Champion, Chams, Aiico, Sterling Bank and Livestock Feeds among others, which impacted positively on Year-To-Date gain to 8.50%. Market capitalization YTD gain increased by N2.58tr, representing 8.51% above its opening level for the year.
Mixed Sector Indices
Sectorial performance indexes during the session were mixed, with the NGX Banking and Consumer Goods closing 0.29% and 0.14% south respectively, while the NGX Insurance led the advancers after gaining 0.11%, followed by Industrial goods with 0.01%. Just as NGX Oil/Gas closed flat.
Market breadth turned negative as losers outnumbered gainers in the ratio of 20:16, while activities in volume and value were down after investors exchanged 123.55m shares worth N2.48bn. Volume was driven by trades in Transcorp, GTCO, UBA, Oando and Fidelity Bank,
Julius Berger and Unity Bank were the best performing stocks, gaining 10% and 9.26% respectively, closing at N26.95 and N0.59 per share respectively on expected dividend income and market forces. On the flip side, CWG and FTN Cocoa lost 7.14% and 6.67% respectively, closing at N0.91 and N0.28per share, purely on profit taking.
We expect positive sentiments and mixed trend to continue as investors react to dividend payouts and expectation of more financials. Market players target dividend paying companies and defensive stocks to protect their portfolios ahead of the governorship and state assembly polls outcome. 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
2. Managing Trade & Investment Risks In A Post-Election Year Using Technical Analysis Tools
3. How To Prepare Ahead Of Policy Shifts By Incoming Administration
4. Identifying Changing Post-Election Trends/Patterns For Enhanced Trading Returns
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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H. 5 Stocks to beat inflation in 2023
“Q2 Master Class 2023 connects you to post-election trade opportunities and ideas to enhance your trading profits
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