Profit Taking Still, As investors Assess Impact Of Inflation Data, Low Purchasing Power, Bet On MPC Outcome

Market Update for March 19

Mixed trading continued on the Nigerian Exchange on Tuesday, as bearish sentiments on profit taking hit blue chip companies and highly priced stocks, weighing on the benchmark NGX All-Share index which closed marginally lower on a low traded volume. Sectoral performance remained bullish, reflecting the impact of buying interests across major sectors of the market, despite the absence of fresh corporate earnings in the market, except for continued notification of delay in filing of the 2023 financials by many companies. All eyes are still on the audited accounts of banks, ahead of the Central Bank of Nigeria policy meeting slated for March 25 and 26, 2024.

Traders and investors have continued portfolio repositioning even as the market enters its distribution phase after forming a triple top chart pattern in a changing market fundamentals and dynamics. Although, we see government and its economic team trying to return the nation’s economy to the path of recovery, even with the continued mismatch of policies and implementation that reflects a disconnection between the fiscal and monetary perspectives.  The latest macroeconomic data has showed inflation at its all-time high, interest rate at the highest and national output slowing down, an indication of late contraction of an economy. The CBN, through its monetary policy, usually moves to stabilize prices, improve economic activities and manage government flows, but the opposite is the case today. It does seem that the MPC has sacrificed the economy on the altar of attracting foreign inflows for improved foreign exchange supply that will help address FX challenges at the expense of productivity economy.

During Tuesday’s session, many companies notified the exchange of their board meetings to approve their 2023 audited financials. The latest were Etranzact and PZ, among others. Airtel Africa continued its share buyback activities updates, while AXA Mansard informed the market of its delay in filing 2023 audited report and Q1 2024 results, just as Zenith Bank notified the market of appointment of Group CEO, while Transcorp Hotel and Transpower appoints non-executive director respectively.  Therefore, investors should target companies with consistent track records of dividend payment, strong fundamentals and growth prospects that will support further growth in earnings which price feeds on in any market cycle.

Technically, the NGX index’s action is still relatively strong with top chart pattern that signaled continuation of profit taking after bearish hammer candlesticks formation revealed reversal of trend, as momentum indicators were mixed to signal relatively strength in the market, as the ADX inched up at 35.11, while RSI and Money Flow Index are mixed to read 65.76 and 69.99 points against the previous session 66.38 and 69.05 points respectively.  As money flow index looks flat to indicate funds flowing into equity space, traders should watch out and trade with caution after the index had formed a top pattern and momentum is relatively weaken. Also, trading volume pattern remained mixed, to suggests rekindled position taking in some sectors and profit taking in the face of others investment windows returns remain below inflation as naira continues to deprecate.

To navigate the rest of the quarter and beyond profitably using fundamental and technical analysis to run, join investdata live sessions at noon every Monday, Wednesday and Friday 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 range market. Despite the oscillating volume of transaction witnessed in recent time, it is time to go shopping for undervalued stocks, sectors and the next insider playing opportunity.

Oil price on Tuesday slowdown to continue its oscillation, as it trades at $86.96 per barrel in the midst of profit taking by traders and stronger dollar, even as China left rate unchanged again in the face of tightening supply as a result of rising geopolitical tension across the globe remained a major threat to many economies and the commodity market. Also, OPEC left production cuts unchanged and other factors that impact oil price as it continued to oscillate. This trend may likely continue in 2024, this up and down movement that drive volatility. As middle East conflict and war in Ukraine last.

Meanwhile, Tuesday’s trading opened in the downside and oscillated throughout the session, on profit taking hitting some stocks, while buying interest continue in some stocks. This situation pushed the NGX’s index to an intraday low of 104,265.57bps from its highs of 104,731.40bps, before closing below its opening figure at 104,553.30bps.

Market technicals for the session were positive and mixed, as volume was higher compared to the previous session in the midst of breadth favoring the bulls on a mixed sentiment as revealed by Investdata’s Sentiments Report showing 62% buy position and 38% sell volume. The total transaction volume index stood at 0.88 points, just as impetus behind the day’s performance was relatively strong as Money Flow Index is looking up at 69.99pts, from the previous day’s 69.05pts, indicating that funds entered the market, despite closing lower.

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Index and Market Caps

The NGX All-Share Index lost 110.03bps, closing at 104,553.31bps after opening at 104,663.34bps, representing a 0.11% drop, just as market capitalization fell by N62.21bn, closing at N59.12tr from the previous day’s N59.18tr, which also represented 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 overbought range has just increased to 60 as they rallied to new highs that call for caution 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.

The downturn was driven by selloffs and profit taking in MTNN, GTCO, Zenith Bank, Dangote Sugar, NB and Chams among others, which impacted negatively on Year-To-Date gain which reduced to 39.97%. Market capitalization YTD gain stood at N14.42 trillion, representing 43.29% above its opening level for the year.

Bullish Sector Indices

The sectoral performance indexes were in green, led by NGX Banking  after gaining 1.07% followed by Insurance, Consumer, Industrial goods and Energy with 0.59%, 0.16%,0.12% and 0.04% respectively.

Market breadth was positive as gainers outnumbered loser in the ratio of 27:23, while activities in volume and value were mixed after stockbrokers had traded 307.05m shares worth N7.59bn. Volume was driven by trades in FBNH, UBA, Accesscorp, Transcorp and Fidelity Bnak.

IEI and International Breweries were the best performing stocks, gaining 10% and 9.89%, closing at N1.32 and N4.89per share respectively on earnings expectation and market forces. On the flip side, DaarComm and CWG lost 9.86% and  9.09% respectively, closing at N0.54 and N5.50per share, purely on selloffs and profit taking.

Market Outlook

We expect a mixed sentiment and profit taking to continue as investors digest CPI as investors and traders await the release of more corporate earnings with dividend possibility ahead of next MPC meeting, while Investors take advantage of low valuation to position and rebalancing portfolio. This is amid the volatility and pullbacks that 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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Theme: Navigating The Stock Market Profitably Amidst Contracting Economy


  1. Actionable Trade Roadmap And Strategies For Any Market Cycle, Mr Olatunde Amolegbe Managing Director Arthur Stevens Asset Management Ltd

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Ambrose Omordion

CRO|Investdata Consulting Ltd