Trend Consolidation May Linger As Investors Await Earnings Reports, Q1 Window Dressing

Market Update for March 22
The seeming bull transition and the ranging market mood continued on the Nigerian Exchange at the midweek, as market players digest the recent 50 basis points rate hike by the Central Bank of Nigeria to 18%, and its impacts on the economy at large.
Meanwhile, all eyes are still on companies that are yet to release their 2022 audited financials ahead of the March 31, 2023 official deadline. Already, the board of Chemical And Allied Products has notified the exchange of its N1.55 dividend for the financial year ended December 31, 2022, assuring that the full-year earnings report will be made available before March 31, 2023.
Wednesday’s NGX All-Share Index closed marginally higher on mixed sentiments and low traded volume while market breadth remained negative on selloffs and profit taking in some tickers, despite extending the bull-run for the second successive session. We note that the market provides better opportunities for discerning investors to hedge against inflation even when fixed income market yields look good, but there is uncertainty of a rate crash by the incoming government to drive the economy. This is even as a policy shift may be a plus for the equity market on likely financial market and economic reset that is underway.
The increasing volatility in the midst of more corporate earnings reports expectations and end of quarter window-dressing may linger yet on post-dividend adjustments that will drive oscillation and make stocks attractive at low prices. Also, the NGX still trades below the T line on a mixed sentiment as attention are shifting to corporate earnings and actions, due to the increasing numbers of companies notifying the exchange of their board meetings to approve audited result and recommend dividend. Also, the unaudited accounts published earlier have given investors an insight into what will likely be offered as dividend.
Technically, the distribution phase of the market at this level supports a pullback or uprend, after forming a cup and handle chart pattern on the daily and weekly time frame, an indication of a bearish divergence between the index action and MACD on a dally chart that supports correction. Let us keep our gaze on market forces and money flow which is looking down.
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Oil price oscillation continued, as it trades at $76.04per barrel, on crude oil inventories build again in the midst of easing banks failure and a mixed outlook of economic recovery in China. 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.
Midweek’s trading started on the upside and oscillated for the rest of the session on buying sentiments in banking and insurance stocks despite profit taking in some other equites. This situation pushed the NGXASI to an intraday high of 54,959.44 basis points from its lows of 54,904.68bps, before closing slightly above its opening points at 54,936.11bps.
Market technicals were mixed with higher volume of trade, compared to the previous session in the midst of breadth favoring the bears on a mixed sentiment as revealed by Investdata’s Sentiments Report showing 57% buy position and 43% sell volume. The total transaction volume index stood at 0.65 points, just as impetus behind the day’s performance was weak going by Money Flow Index at 35.63pts, from the previous day’s 31.17pts, indicating that funds entered the market.
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Index and Market Caps
At the close of the day’s trading, the benchmark NGX All Share Index inched 31.43 basis points up, closing at 54,936.11bps from the 54,904.68bps it opened, representing a 0.06% up, just as market capitalization rose by N17.62bn to close at N29.93tr, from the previous day’s N29.91tr, which also represented a 0.06% appreciation in value.
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Wednesday’s upturn was driven by accumulation in the shares of GTCO, FCMB, Fidelity Bank, FBNH, NGXGroup, Transcorp, Linkage Assurance, Wapic and Lasaco among others, which impacted mildly on Year-To-Date gain to 7.19%. Market capitalization YTD gain stood at N1.96tr, representing 7.21% above its opening level for the year.

Bearish Sector Indices
Sectorial performance indexes were down, save for the NGX Insurance that closed 0.08% higher, while the NGX Consumer goods led the decliners after sliding by 0.02%, followed by Banking with 0.01%. Just as NGX Oil/Gas and Industrial goods closed flat.
Market breadth turned negative as losers outpaced gainer in the ratio of 14:9, while activities in volume and value were mixed after players exchanged 134.15m shares worth N1.33bn, with volume was driven by trades in Transcorp, UBA, Courtville Business Solution, GTCO and FBNH.
GTCO and Coronation Insurance were the best performing stocks for the session after gaining 2.44% each, closing at N25.20 and N0.42 per share respectively, on earnings expectation and market forces. On the flip side, NCR and FTNCocoa lost 9.69% and 6.90% respectively, closing at N2.61 and N0.27per share, purely on selloffs and profit taking.

Market Outlook
We expect the mixed sentiments and consolidation of trend to continue as investors look to more earnings reports in the midst of expected quarter end window dressing and price adjustment for dividend. Income investors continue to target dividend paying and defensive stocks to protect their portfolios post-dividend adjustment. 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.

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Theme: Post-Election Investment Opportunities For Consistent Profits In 2023
1. Nigeria: Post-Election Investment Opportunities In Sectors/Industries, Mr Abiola Rasaq, Head Corporate Strategy at CSCS Plc
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3. How To Prepare Ahead Of Policy Shifts By Incoming Administration, Alhaji Garba Kurfi MD/CEO APT Securities & Funds Ltd
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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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Tel: 08028164085, 08179547605