Market Update for February 17

Monday’s was a bearish outing on the Nigerian Exchange to start the week on a negative note, following selloffs and profit booking across low, medium and large cap stocks. This, as expected, dragged the benchmark NGX All-Share Index marginally lower on a low traded volume and negative market internals extending the bear run for the second successive session ahead of the release of the January Consumer Price Index, Treasury Bills primary market auction and the Central Bank of Nigeria policy meeting, all in the midst of ongoing earnings reporting season. Also, all eyes are on the release of audited financial statements and dividend announcements from Transcorp, Wapco, Africa Prudential, Dangote Cement, BUA Cement, Ucap, Nestle, Seplat and others. These numbers are expected to impact the market positively if their earnings reports beat market expectations.

The selling sentiment and pullbacks calls for caution as more stocks recorded lost during the session in the midst of the earnings season and expected full-year audited accounts which will continue to guide positioning and money flow into the market. The profit taking in financial stocks and others supported the distribution phase that is creating new buying opportunities for stocks ahead of their earnings reports. This downtrend in the face of volatility was as a result of portfolio realignment and players searching value in stocks that are yet to rally, by focusing on low valuation and growth opportunities inherent in the different stocks and industries.

The NGX’s waves and correction are short term traders profit taking-driven in addition to positioning in preparation for more audited scorecards inflow and dividend expectation this season. Importantly also, dividend payout and yields remain very important to players at a time like this, when there is over-subscription in TB auction and rates are declining in recent time. Knowing that one day does not change a trend and it does not change outlook especially with reactions to earnings as market players are digesting these impressive numbers and making their decisions.

Investors should target dividend paying companies, as pullbacks will impact dividend yields positively and provide room for higher upside that support capital gain. This is due to market had entered overbought region that signal  price adjustment and correction  in the midst of  selling sentiments for some sectors, consolidation moves in some industries and expectations of positive corporate numbers from some others, based on their quarterly and full year unaudited performance, coupled with their  dividend payouts history.

Technically, money flow and other momentum tools were down, revealing weakness and  present opportunity of buying low and selling high in the midst ongoing volatility and mixed sentiment. As the index inched down to signal caution, thereby creating the perfect setup for high probability of continuation to catch dividend season repositioning at the right price. Also, as the index still trades above the T-line and the two moving averages of 50-EMA and 50-SMA, this indicates relatively strength in the face of changing market fundamentals and technicals on the NGX and the economy.

The NGX extended its distribution phase again on a selling sentiment, as candlestick formation and momentum indicators still reveal downtrend. As ADX was up to read 40.84points, while RSI and Money Flow Index were mixed at 69.80 and 72.77 points against the previous session’s 70.81 and 72.67 points respectively. Consequently, market players should watch this current trend and trade wisely in the face of funds entering the market on a selling sentiment in some sectors and position taking in others on a daily time frame. Also, trading volume pattern continued to oscillates, suggesting smart money are locking in traders into bad position amid players revaluing the market and short term opportunities, looking at economic events in the face of policy direction of the government that look inconsistent and global economic outlook in the face of trade war tension.

To navigate the rest of Q1 and beyond profitably, it is important to run with economic events, fundamental and technical analysis, join investdata live sessions at noon every Monday, Wednesday and Friday’s trading session“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 pullbacks. Despite the oscillating volume of transaction witnessed in recent time, it is time to position in undervalued stocks, sectors and the next insider playing opportunity.

Oil prices on Monday were slightly down, continuing its oscillation, trading at $75.30 per barrel in the midst of expected peace talk Russia and Ukraine,  increasing US stockpile  and trade war  dampening sentiment in commodity market. Even as OPEC delay production cut to April 2025. Looking at the ceasefire deal in the Middle East, while Russia and Ukraine war continue. As all eyes are on US President Policy uncertainty continued to drive volatility.  The geopolitical tension across many economies remains a concern to the global economy and energy consumption in 2025. This trend may likely continue, while the up and down movement continues to drive volatility, even as the raging war between Ukraine and Russia continues to influence global oil supply and demand.

Monday’s trading opened slightly in the upside before pulling back which was sustained throughout the session, despite oscillating on profit taking in Oando, GTCO, Transcorp and others. The situation pushed the NGX’s index to an intra-day low of 107.911.40bps from its highs of 108,235.70bps, before closing below its opening level at 107,937.70bps.

Market technicals were negative and mixed with high volume when compared to the previous session in the midst of breadth favoring the bears on a selling sentiment as revealed by Investdata’s Sentiments Report showing 8% buy position and 92% sell volume. The total transaction volume index stood at 0.92points, just as impetus behind the day’s performance was strong as Money Flow Index inched up to read 72.77pts, from the previous day’s 72.67pts, indicating that funds entered the market, despite closing lower.

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Index and Market Caps

The NGX All-Share Index shed 115.78 basis points, closing at 107,937.74bps from 108,053.52bps, representing a 0.11% drop, while market capitalization fell by N72.50bn, at N67.36r from the previous day’s N67.42tr, representing a 0.11% value loss.

Attention: If you have not signed up for INVESTDATA’s buy and sell signal setup, don’t delay, because the number of stocks entering their oversold range has increased as market correction and volatility call for intelligent trading and positive chart patterns to be on our watchlist. These stocks have potentials to retrace, considering their earnings prospects and the oscillating moves in an upmarket and weak economy.

To become a member, send ‘YES’ or ‘STOCKS’ to the phone numbers below. Take advantage of this service to buy right and sell right at the current oscillating market in the midst of earnings season, portfolio reshuffling, and repositioning as we await an economic reform policy that can stimulate and re-track the economy to the path of growth and development.

Meanwhile, the session dowpturn was driven by selloffs and profit taking in the shares of VFDGroup, Oando, Eterna, PZ, GTCO, UBA, Accesscorp, Honeywell, Transcorp and Learn Africa, among others. This impacted mildly on Year-To-Date gain that slide to 4.87%, while Market capitalization gain stood at N5.687tr, representing 7.30% increase over its opening level for the year.

Mixed Sector Indices

Sectoral performance indexes were mixed, as NGX Consumer and Industrial goods indexes  closed  1.35% and 0.12% higher respectively, while the NGX Insurance index led the decliners after losing 1.69%% followed by Energy and  Banking with 1.07% and 0.40% respectively.

Market breadth was negative, as losers outnumbered gainers in the ratio of 42:19, while activities in volume and value were mixed after investors exchanged 511.10 million shares worth N12.81bn. Volume was driven by trades in S Accesscorp, Aiico, UPDC, Fidelity Bank and UBA.

NB and Cadbury were the best performing stocks, gaining 10% and 9.97% respectively, closing at N36.30 and N32.00 per share respectively on the back of sentiment and market forces. On the flip side, Ikeja Hotel and Learn Africa lost 10% each, closing at N12.60 and N3.87per share, purely on profit taking and selloffs.

Market Outlook

We expect profit taking to continue on mixed sentiment  and cautious trading, as more earnings are expected to hit the market with dividend announcement. Also, sector rotation and portfolio rebalancing continued in the market with investors taking advantage of price correction to buy into value.

This is amid the volatility and pullbacks that add more strength to upside potential. Consequently, investors should take advantage of price correction. Also looking at the trends and events across the globe and domestically.

Ambrose Omordion

CRO|Investdata Consulting Ltd

info@investdata.com.ng

ambrose.o@investdataonline.com

ambroseconsultants@yahoo.com

08028164085