Positive Sentiments Still On Earnings Inflow, Investors Await Presidential Poll Outcome, Eye Div, Defensive Stocks
Market Update for February 28
Nigeria’s local bourse continued its positive trend on a stronger momentum Tuesday, as buying interest increased due to the impressive corporate earnings and actions that beat the prevailing rates and yields in the fixed income market. This is even as more earnings are expected to flow into the market, while also the declaration of an eventual winner of the just concluded Presidential poll will largely determine the next direction of the market.
There is expectation that over six companies on the NGX would release their audited accounts for the period ended December 31, 2022 to the market in less than 24 hours, thereby supporting the prevailing strong momentum in the equity space, just like Lafarge Africa, Nigerian Enamelware, Royal Exchange and Tantalizers released their numbers which came mixed with directors of Lafarge Africa offering N2.00 per share, while those of Nigerian Enamelware have recommended a bonus of two new shares for every three presently held. Already, many companies have notified investors of approvals of their 2022 audited results, and the recommendation of dividends for the period, following which such results should hit the market any moment from now.
The positive sentiment in low, mid and high cap companies have supported the uptrend as the NGX All-Share index closed higher on an above average traded volume and positive market breadth, in the face of more funds entering the market. Also noteworthy is the fact that the market still offers a ‘buy’ opportunity for dividend income investors as reshuffle their portfolios on the strength of the prevailing high inflation rate of 21.82% and strong momentum behind many of these dividend paying companies.
The market is heading for the 56,000 basis points mark, trading above the T line on s strong momentum, amid repositioning in some companies and sectors expected to declare dividend 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, since Tuesday is the last trading day of February, notwithstanding uncertainties associated with the 2023 general elections as market players awaits presidential polls outcome.
Technically, the NGX index’s action is on a markup phase which support uptrend after forming cup and handle chart patterns that signals reversal or continuation of trend on a daily and weekly time frame. Just as bullish divergence between the index action and MACD on a dally chart that supports uptrend. Let us keep our gaze on market forces and money flow which is looking up.
To navigate the rest of the quarter 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, as it rebounded to trade at $84.02 per barrel on strong demand for oil as China economic recovery continue in the midst of rate hike by Fed. Just as attacked on Ukraine is rising even when China is calling peace and ceasefire. This geopolitical tension, high interest and inflation rates across the globe continue to threaten the world. Also, supply tightened due to the Russia-Ukraine war that has lingered so far. The up and down movement of oil price also continues to drive volatility across markets.
Tuesday’s trading opened in the green and was sustained for the rest the session, on buying interests in blue chip stocks and reaction to dividend announcement, a situation that pushed the NGXASI to an intraday high of 55,819.41 basis points from its lows of 55,322.01bps, before closing above its opening figure at 55,806.26bps.
Market technicals were positive and strong with higher volume of trade, compared to the previous session in the midst of breadth favoring bulls on a positive sentiment as revealed by Investdata’s Sentiments Report showing 97% buy position and 3% sell volume. The total transaction volume index stood at 0.88oints, just as momentum behind the day’s performance was strong as Money Flow Index looked up at 74.22pts, from the previous day’s 73.12pts, indicating that funds entered the market.
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Index and Market Caps
The benchmark NGX All-Share Index at the end of Tuesday’s trading gained 477.84basis points, closing at 55,806.26bps, after opening at 55,328.42bps, representing a 0.86% growth, just as market capitalization rose by N260.31bn to close at N30.40tr from the previous day’s N30.14tr, which also represented a 0.86% value gain.
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Meanwhile, Tuesday’s upturn was driven by demand in the shares of Dangote Cement, Geregu Power, Stanbic IBTC, Oando, C & I Leasing, MRS Oil, Accescorp, GTCO, Zenith Bank and Eterna among others, which impacted positively on Year-To-Date gain to 8.89%. Market capitalization YTD gain increased at N2,62tr, representing 8.91% above its opening level for the year.
Bullish Sector Indices
Sectorial performance indexes for the session were up, except for NGX Consumer goods that closed lower by 0.09%, while NGX Banking led the advancers after gaining 1.68%, followed by Industrial Goods Energy and Insurance with 1.40%, 0.41% and 0.28% respectively.
Market breadth was positive as gainers outnumbered losers in the ratio of 35:9, while transactions in volume and value were high, as investors exchanged 237.17m shares worth N4.39bn. Volume was driven by trades in Fidelity Bank, Zenith Bank, Oando, Transcorp and GTCO.
MRS Oil and Stanbic IBTC were the best performing stocks after gaining 10% and 9.88% respectively, closing at N36.85 and N41.70per share respectively on impressive earnings Q4 and market forces. On the flip side, Multiverse and CWG lost 10% and 9.09% respectively, closing at N3.96 and N0.90per share, purely on selloffs and profit taking.
We expect positive sentiments and mixed trend on reaction to impressive earnings and profit taking. Also, the outcome of the presidential election is likely to boost confidence despite all disagreement in the process. Market players target dividend paying companies and defensive stocks to protect their portfolios ahead of Saturday elections’ outcome. Any pullback at this point may add more strength to upside potential. As such, investors should take advantage of price correction. Also looking at the trends and events across the globe and domestically.
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