NGX Rebounds On Renewed Buying Interests, Positive Sentiment For Q1 Earnings

Market roundup for April 2021

Transactions on the Nigerian closed positively on Friday to end the month of
April higher, thereby halting months of correction and pullbacks on renewed buying
interests and positive sentiments, with investors reacting positively to corporate actions, while
weighing the outpouring of Q1 numbers in the midst of rising inflation and yields in the fixed
income space.

History repeated itself again this year, as the transactions on the Nigerian Exchange Limited
(NGX) closed positive for the month of April, confirming a 20-year market data analysis of
INVESTDATA research. According to the data, the month of April and, indeed, Q2 over the
years, have remained a period of position taking on the Nigerian equities market, closing in the
green for 12 of the 20-year period, and down in eight years.

Influx of Q1 financials
Meanwhile, the influx of Q1 financials, few second and third quarter numbers, coupled with
unaudited full-year March accounts boosted market recovery this year.
The candlestick pattern that represents the month’s trading fully consumed the
pattern in the month of March, while technically forming a bullish engulfing and hammer
candle that supports a reversal and uptrend. This is therefore signaling the beginning of a short
bull-run in the new month, depending on market forces.

Stronger possibility of rallying in the month of May
Combining this fact with the current situation in the market, we conclude that the market has a
stronger possibility of rallying in the month of May, apart from the rising Treasury Bill rates and
bond yields that remain threats to the equity prices. Investors reaction to the first quarter
numbers recently released and the qualification dates for dividends will determine how far the
market will go in this new month.

Nevertheless, we note that economic fundamentals are still mixed and dicey, as all eyes are on
such data as the Q1 GDP report, April inflation, Purchasing Managers’ Index, and indeed, the
outcome of this month’s Monetary Policy Committee meeting, given the new realities, will go a
long way in influencing market . We see the on-going fasting and abstinence
during the Islamic month of Ramadan by Muslims across the globe, and the usual food scarcity
that normally characterize planting season, further impacting Nigeria’s inflation rate negatively.
We expect a significant positive adjustment in food inflation, especially with the rising
challenges that have driven farmers off their farms and businesses.

The NGX recorded 20 trading sessions during the month under review, to close higher, with the
composite NGX All-Share index oscillated, with 12 trading days of up market, and eight sessions
of down market during the period. The benchmark index gained 795.15 points, closing at
39,834.42bp after breaking out the resistance levels of 39,412.30and 39,686.43 from its
39,045.13bp opening level, representing 2.02% growth over the period.

The buying volume of total transactions for the month was 100%, halting the previous months’
down market, as volume index for the period stood at 0.79, while market capitalisation
recording N42bn growth to N20.85tr, from an opening value of N20.43tr, representing 2.02%
appreciation in value. The market had positive sentiments and reactions to the audited
financials and Q1 scorecards that beat investors and analysts’ estimates. The month’s traded
volume was down by 37.87% at 5.43bn shares, from 8.74bn units in the previous month.
The NSE All-Share index’s year-to-date loss position stood at 1.08%, just as market
capitalisation adjusted down to N209.88 billion representing 0.99% lost YTD from the opening

Market breadth
Market breadth for April was however negative as decliners outpaced advancers in the ratio of
51:39 to short-lived the bear transition, reflecting the mixed economic data, positive
sentiments and the barrage of first quarter earnings reports that hit the market. The earnings
reports were impressive and higher than market expectations, especially such sectors as
Healthcare, Agro-Business, Industrial goods, Telecommunication, Energy, few from Banking and
consumer goods. They helped the major index to close positively, except for Banking index that
was down on the performing sectors chart for April.

The sectoral chart below shows that premium stocks propelled the market the
most in the period under review, gaining 6.93%, compared to 2.02% rally recorded by the
benchmark NGX All Share Index. It was followed by the NSE pension which rose by 3.56%,
reflecting investor confidence in dividend paying stocks, especially blue chip companies and
their resilience over the years; ahead of the NSE industrial goods index, which moved 3.06% up.
This was attributed to the high payout and impressive numbers after it led price rally in
the large cap companies and sector, amidst the relatively low Price-To-Earnings attraction in
the market. Other indexes that closed green during the month were: NSE Consumer goods,
Energy NSE 50 Index, NSE 30, and NSE Growth. On the flip side, the NSE Banking index took the
lead with its 4.76% slip; followed by NSE Insurance with1.49%.


NGX 30

Sector Index for April

Best Performing Stocks for April
The month’s best performer was Royal Exchange , which is one of the major low price
stocks benefiting from the recapitalization in its sector, as the market expects it
full year and Q1 2021 results, as the stock closed the month better by gaining a significant
89.29% of its opening price for the month. It was followed by Linkage , which chalked
41.67%; while Japaul Gold took 36.36%; and Consolidated Hallmark Insurance, 30%.
Low cap companies dominated the top gainers for the month included: Meyer 26.83%;
Transcorp, 15.38%; among others.

Best Performing Stocks in April 2021

Securities Sector Open Close % Change
Royal Exchange Insurance 0.28 0.58 89.29
Linkage Insurance 0.60 0.85 41.67
Japaul Gold Oil/Gas 0.44 0.60 36.36
CHI Insurance 0.30 0.39 30.00
Meyer Industrial Goods 0.41 0.52 26.83
Transcorp Conglomerates 0.78 0.90 15.38
UACN Conglomerates 9.00 10.30 14.44
NB Consumer goods 45.50 54.80 12.99
Prestige Assurance Insurance 0.41 0.46 12.20
Fidson Healthcare Healthcare 4.75 5.28 11.16
Worst performing stocks for April

The top losers table was led by NCR, which shed 18.64%, on the back of its obviously
unimpressive , just as market forces and mixed sentiment dragged Unity Bank
down by 17.33%; while Caverton Offshore declined by 14.98%; Guinness Nigeria, 14.24%; and
GSK, 13.89% on the back of low dividend payout and unimpressive Q1 numbers.

Worst Performing Stocks in April 2021
Securities Sector Open Close
NCR ICT 2.79 2.27 -18.64
Unity Bank Banking 0.75 0.62 -17.33
Caverton Services 2.07 1.76 -14.98
Guinness Consumer goods 31.60 27.10 -14.24
GSK Healthcare 7.20 6.20 -13.89
Daar Communication Services 0.23 0.20 -13.04
FTN Cocoa Agro Business 0.48 0.42 -12.50
Custodian Investment Other Financial 6.60 5.80 -12.12
Access Bank Banking 8.30 7.30 -12.05
Cornerstone Insurance Insurance 0.60 0.53 -11.67

Technical View on Monthly Time Frame

NGX index action resisted decline technically in the month of April, as it formed a bullish
engulfing and hammer candlestick that support reversal and uptrend depending on market

forces in the new month. The renewed buying interest and positive sentiment for the financials
are likely to continue. The inflow to equity assets as revealed by money flow index supported
the seeming reversal on smart money reposition their portfolios.

Where to invest and expectations for the rest of Q2
The global economy and market remain mixed as vaccine driven economic recovery across
climates continue, with the recently upgrading its economic growth outlook based
on the ongoing vaccination and government polices at different level.

Back home, the seeming economic recovery and mixed indicators are likely to continue in the
new month as we expect moreeconomic data and the events to confirm the real state of the
nation’s economy as of the 2021 national budget continues. This will be helped
by the CBN’s continued intervention in critical sectors to boost productivity needed to create
employment and support recovery. Reasons for this are not far-fetched, given the impact of
Covid 19 and in the system.

Ambrose Omordion
CRO|Investdata Consulting Ltd writes in from Lagos

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