Uptrend May Linger As Q1 Ends, Investors Analyze Recent Earnings Inflow, Position For Dividend, Q2

Market Update for March 30
There was sustained bargain hunting for blue chip stocks Thursday on the Nigerian Exchange, amid reactions to earlier released numbers continued in the midst of more corporate earnings hitting the market ahead of the quarter-end window dressing by fund managers seeking to close the period higher and at the same time reposition for the new quarter. All eyes remain on Q1 numbers, dividend adjustments, rising yields in the fixed income market and expected macroeconomic data, just as post-election risks or panic is on the rise due to the recent statement by the Department of State Service (DSS) about an ongoing plot for an interim government that may truncate the nation’s democracy if not checked.
There is the effect of good market vibes that changed on earnings released so far heading to the last trading day of the month amid buying pressure across the major sectors on a positive market breadth and very high traded volume to extend the bull run for two successive sessions consecutive sessions. There is also the inflow of more long awaited 2022 audited financials from first-tier banks and others that have started rolling in, offering the market some stability ahead of the Q2 portfolio repositioning.
The recent market rebound is strengthening as NGX index sets to cross the golden 50-Day Simple Moving Average and EMA, thereby creating opportunities for technical traders, as the March 31 deadline for submission of the December year-end earnings reports comes to a close. There is also portfolio rebalancing and positioning for Q2 trading on the strength of expected 2023 Q1 earnings reports, even when it seems likely to be mixed numbers for Q1 as a result of low economic activities due to cash crouch.
Meanwhile, the United Bank for Africa (UBA) released its impressive full-year audited reports, which came above market expectation, with dividend of 90 kobo, while Okomu Oil, NEM Insurance and Trans-nationwide Express announced final dividend of N12, 30kobo and 2 kobo respectively for approval by their shareholders. The prevailing dividend yields and low market price to earnings ratio provides better opportunities for discerning investors to hedge against inflation even when fixed income market yields look mixed. There is however the uncertainty of a rate crash by the incoming government to drive the economy, just as a policy shift may be a plus for the equities on a likely financial market and economic reset.
Market volatility remains at the extreme on positive sentiment, crossing the T-line, signaling a new uptrend and improving momentum as focus is on corporate earnings, due to the increasing number of companies announcing their board meeting dates to approve audited results and recommend dividend. Also, Q1 closed period notification continued on the exchange.
Technically, the NGX has entered a markup phase at this level supports an uptrend if the coming financials, especially from first-tier banks beat expectations, an indication of a bullish divergence between the index action and momentum on a dally chart that supports rally. Let us keep our gaze on market forces to confirm the next move, as money flow weak remain relatively but looking up.
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Oil price oscillation continued, rebounding to trade at $79.28 per barrel on OPEC not increasing production in the midst of confidence returning to the global banks and higher demand as China economic recovery expand. Just as attack on Ukraine is rising even while 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.
Meanwhile, Thursday’s trading started in the green and it was sustained throughout the day on increasing buying interest in high priced stocks and blue chip companies, a situation that pushed the NGXASI across the 54,000 marks to an intraday high of 54,413,21 basis points from its lows of 53,603.80ps, before closing above its opening figure at 54,413.21bps.
Market technicals were positive and strong with higher transaction volume, compared to the previous session in the midst of breadth favoring the bulls on a buying sentiment as revealed by Investdata’s Sentiments Report showing 100% buy position and 0% sell volume. The total transaction volume index stood at 4.21 points, just as momentum behind the day’s performance was weak going by Money Flow Index at 31.60pts, from the previous day’s 17.76pts, indicating that funds entered the market.
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Index and Market Caps
The NGX All Share Index at the close of Thursday’s trading gained 809.41 basis points, closing at 54,413.21bps from the 53,603.80bps it opened, representing a 1.51% growth, just as market capitalization rose by N440-.93bn to close at N29.64tr, from the previous day’s N29.20tr, which also represented a 1.51% appreciation in value.
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Thursday’s upturn was driven by demand for MTNN, Zenith Bank, GTCO, NGXGroup, Champion, FBNH, PZ, Accesscorp and CHI Plc among others, which impacted positively on Year-To-Date gain which reduce to 6.17%. Market capitalization YTD gain stood at N1.84tr, representing 6.19% above its opening level for the year.

Bullish Sector Indices
Sectorial performance indexes were mixed, save for NGX Consume goods that closed lower by 0.02%, while NGX Banking led the advancers after gaining 1.00%, followed by Insurance and Industrial goods with 1.97% and 0,12% respectively.
Market breadth was positive as gainers outpaced losers in the ratio of 23:9, while activates in volume and value were up after investors exchanged 973.64m shares worth N4.23bn, with volume driven by trades in Transcotp, Fidelity Bank, UBA, Zenith Bank and Oando.
Oando and Sunu Assurance were the best performing stocks for the day after gaining 9.98% and 9.09%, closing at N5.40 and N0.48 per share respectively, on market forces. On the flip side, PZ and Chams lost 5.88% and 4.17% respectively, closing at N11.20 and N0.23per share, purely on profit taking.

Market Outlook
We expect positive sentiments and uptrend to continue, being the last trading session of the month and quarter as players analyze recent earnings inflow, ahead of more earnings reports in the midst of price adjustment for dividend and Q2 positioning. We note that income investors continue to target dividend paying and defensive stocks to protect their portfolios post-dividend adjustments. 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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Tel: 08028164085, 08179547605