Trend Stays Mixed As All Eyes On February Inflation Data, MPC Meeting, More Corporate Actions

Market Update for March 14

The gaining momentum on the Nigerian Exchange slowed down on Thursday, reflecting a mixed sentiment in the midst of buying interests in some sectors and counters, while traders cashed out profits from the recent rally while repositioning their portfolios expecting more corporate scorecards. Traders and investors are also keeping the February inflation data scheduled for release Friday in view, as it will reveal the state of the nation’s macroeconomic position ahead of next week’s policy committee meeting of the Central Bank of Nigeria (CBN), being the last week of March. Members of the MPC will at their meeting measure the impact or the transmission of its last policy decision on the economy, as such decisions drive and give direction while using the various policy instruments to stabilize prices, improve economic activities and manage government flows.

The composite NGX All-Share index closed slightly higher on a low traded volume and negative market breadth, signaling the wait-and-see attitude of market players, with profit taking underway after nine successive sessions of bull-run, trading above the T-line and 104,000 basis points mark in midst of higher yields outlook. We note that the earnings reporting season has entered its peak with all eyes on financial services providers especially to give direction in the face of rising inflation and FX challenges.

At the end of Thursday’s trading, more companies notified the investing public of board meetings to approve their 2023 audited financials, the latest being BUA Foods and Neimeth Pharmaceuticals, among others. Airtel Africa continued its share buyback activities and insider dealings, just as updates were provided Transcorp Power and Nascon.

The uptrend momentum has persisted with the index staying above the T-Line to show strength, even when the index’s action is gradually entering a distribution phase that will create buy opportunities for dividend players ahead of more audited accounts. Market players should watch out for the value areas of resistance and support levels to trade this season, by effectively looking at price action, momentum and volume, as a technical trader. The index’s action has displayed a mixed picture as all eyes are on companies’ earnings, following the optimism fueled by the belief that the impressive performance from the financial sector among others may impact the market positively.

The bearish hammer candlestick formation and top chart pattern revealed reversal of trend which needs confirmation as trading opens this morning at the NGX.  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 index’s action is still relatively strong with top chart pattern that signaled possible reversal as profit taking is underway.

The momentum indicators signal relatively strength in the market, as the ADX inched up at 32.65, while RSI and Money Flow Index are looking up to read 66 and 64.36 points against the previous session 65.87 and 64.74 points respectively.  As money flow index looks flattish to indicate slowdown of funds flowing into equity space, traders should watch out and trade with caution after the index had formed a top pattern. 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 Thursday extended its rally to continue its oscillation, as it trades at $85,23 per barrel to hit four months high in the midst of tightening supply and attack on Red sea shipping lane. The 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, Thursday’s trading opened slightly on the downside before rebounding and it was sustained for the rest of the session, despite oscillating on buying interest in some blue-chip companies and others, while profit taking hit insurance stocks.  This situation pushed the NGX’s index to an intraday high of 104,148.00bps from its lows of 103,885.90bps, before closing above its opening figure at 104,056.21bps.

Market technicals for the session were weak and mixed, as volume was lower 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 65% buy position and 35% sell volume. The total transaction volume index stood at 0.57 points, just as impetus behind the day’s performance was relatively strong as Money Flow Index is looking up at 64.36pts, from the previous day’s 64.74pts, indicating that funds left the market.

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Index and Market Caps

The NGX All-Share Index at the end of Thursday inched up by 48.90bps, closing at 104,056.21bps after opening at 104,007.36bps, representing a 0.05% up, just as market capitalization rose by N27.49billion, closing at N58.84tr from the previous day’s N58.81tr, which also represented a 0.05%  value gain.

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 upturn was driven by demand for the shares of Unilever, FBNH, Accesscorp, Zenith Bank, Dangote Sugar, NB, Wapco and Guinness among others, which impacted positively on Year-To-Date gain which increased to 39.16%. Market capitalization YTD gain stood at N14.42 trillion, representing 43.59% above its opening level for the year.

Mixed Sector Indices

The sectoral performance indexes were mixed, as NGX Insurance closed 1.16% lower, while the NGX Consumer Goods advanced the most after gaining 0.38% followed by Banking and Industrial goods with 0.25% and 0.03% respectively. Just as NGX Oil & Gas finished flat.

Market breadth turned negative as losers outnumbered gainers in the ratio of 23:19, while activities in volume and value were down after stockbrokers had traded 226.31m shares worth N7.41bn. Volume was driven by trades in FBNH, Transcorp, Accesscorp, GTCO and Zenith Bank.

Royal Exchange Assurance and Unilever were the best performing stocks, gaining 9.76% and 9.59%, closing at N0.79 and N16.00per share respectively on earnings expectation and market forces. On the flip side, IEI and Sunu Assurance lost 10% and 9.93% respectively, closing at N1.35 and N1.27per share, purely on selloffs and profit taking.

Market Outlook

Being the last trading session for the week,  we expect a mixed sentiment and profit taking  to continue as investors look forward to February CPI today, just as more corporate earnings with dividend are expected to hits the market and 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


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Ambrose Omordion

CRO|Investdata Consulting Ltd