Market Update for June 18
It was a very positive midweek trading on the Nigerian Exchange, following the rekindled buying interest in all classes of stocks after the recent pullbacks driven by profit taking and reactions to a central bank of Nigeria circular barring the country’s banks enjoy some form of forbearance from paying dividend, executive compensation, or further investment in foreign subsidiaries. The CBN has since made clarification on the issue, assurance of the healthy state of the bank, plans to remedy the situation and even further boost their capital adequacy. These had triggered strong momentum and positive sentiment that supported the rebound witnessed at the end of the session.
In any market of the world today, news of any kind bad or good has impact that drive sentiment, so the manner and way of communication by regulators, policy makers and others should be clear and unambiguous. Also, consultants are very necessary among regulators, especially in this case, with others like the Securities & Exchange Commission, National Insurance Commission and the National Pension Commission to avoid this kind of panic situation. Clear communication in any matter will boost confidence and guide investment decision any time and day.
As mentioned in our update yesterday, the market was awaiting clarification from the CBN capable of triggering continuation of downtrend or a reversal. There was a strong uptrend immediately the market saw the CBN clarification of Nigeria banks position and the news from Zenith Bank and FCMB Group, pushing the benchmark index to a new all-time high as it crossed 116,000 and 117,000 basis points marks to test 117,156.16 in one day and ahead of quarter end window dressing, half year earnings reporting season and the planned policy meeting in July.
The rebound at midweek followed sector rotation and portfolios realignments by market players as investors digest the recent macroeconomic reports and unfolding global uncertainties due to rising geopolitical tensions and wars. There is need to avoid panic selling. However, let your trading plan and investment objective guide your entry and exit. As improving macroeconomic data points to where the economy is heading on government’s economic reforms and others.
The renewed buying momentum weighed on the benchmark NGX All-Share index closed higher on a low traded volume and positive market breadth in the face of a new markup phase that should guide market players watching the momentum, price action and market structure while timing their trades and avoiding losing money with their stop loss. As they navigate the market and targeting value on the strength of companies’ performance and prospect, looking at growth and defensive stocks with strong earnings power and positive technicals in the face of sector rotation persisting.
Technically, money flow and other momentum tools were up indicating that funds returned to the market on position taking that presents opportunities to buy low and sell high in the midst ongoing volatility and uptrend. The index inched higher on a buying interest, thereby creating the perfect setup for high probability of continuation to catch better-than-expected corporate earnings to reposition at the right price. Also, the index action trading above T-line and the two moving averages of 50-EMA and 50-SMA which reveals strength in the midst of changing market fundamentals and technicals on the NGX and the economy.
Market pulse for the session as revealed by candlestick formation and momentum indicators, shows that the ADX is looking up to read 49.74 points, while RSI and Money Flow Index were up at 84.33 and 63.44points against the previous session’s 78.62 and 62.54 points respectively. At this stage of NGX, players should watch the trend and trade wisely in the midst of markup phase and buying sentiment in some sectors and profit taking in others on a daily time frame. Also, trading volume pattern continues to oscillate, suggesting smart money are gradually taking position amid revaluation of the market and short-term opportunities, looking at economic events in the face of policy direction of the government and global economic outlook in the face of uncertainties and geopolitical tensions.
To navigate the rest of Q2 and beyond profitably, it is important to run with economic events, fundamental and technical analysis, join investdata live sessions at noon every Monday, Wednesday and Friday’s trading session “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 pullbacks. Despite the oscillating volume of transaction witnessed in recent time, it is time to position in undervalued stocks, sectors and the next insider playing opportunity.
Oil prices at the midweek continued its oscillation, trading at $75.54 per barrel, in the midst of US Fed leaving rate unchanged, escalating Mideast war and that of Ukraine and Russia. As peace talk seems to have failed, even with OPEC planning to increased production in the face of wars. As soft macroeconomic data emanating from US and China remain a concern for players. The trade tariffs negotiations seem to have fallout to signal global recession and weak economic activities, just as geopolitical tensions across many economies remain a major source of concern to the global economy and energy consumption in 2025. This trend may likely continue, while the up and down movement continues to drive volatility.
Midweek’s trading opened sharply in the upside, and its was sustained for the rest of the session, despite oscillating on positioning in some stocks and profit taking in others. This situation pushed the NGX’s index to intra-day high of 117.156.16bps from its lows of 114,909.34bps, before closing above its opening level at 116,786.87bps.
Market technicals were strong and mixed with lower volume when compared to previous session in the midst of breadth that favours the bulls on a buying sentiment as revealed by Investdata’s Sentiments Report showing 96% buy position and 4% sell volume. The total transaction volume index stood at 0.99points, just as energy behind the day’s performance was relatively strong, as Money Flow Index was inched up to read 63.44pts, from the previous day’s 62.54pts, indicating that funds entering the market.
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Index and Market Caps
At the end of trading, the composite index NGXASI gained 1,630 basis points, closing at 116,786.87bps from 114,910.60bps, representing a 1.63% growth, while market capitalization rose by N1.08 trillion to close at N73.68tr from the previous day’s N72.50tr, representing a 1.63% value gain.
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The upturn was driven by position taking in the shares of Seplat, Transcorp Power, UBA, FirstHoldco, Aradel, Oando, Zenith Bank, Accesscorp, Nahco, Presco and MTNN, among others, which impacted positively on Year-To-Date gain which inched higher to 13.47% while Market capitalization gain stood at N17.12tr, representing 17.13% increase over its opening level for the year.
Bullish Sector Indices
Sectoral performance indexes were up, except for NGX Consumer Goods index that closed lower by 0.16%, while the NGX Energy index led the advancers, gaining 7.49% followed by Banking and Insurance with 3.25% and 2.02% respectively.
Market breadth turned positive as gainers outnumbered losers in the ratio of 36:29, while activities in volume and value were mixed, after investors exchanged 640.08m shares worth N26.00bn, with volume driven by trades in Zenith Bank, Accesscorp, UBA, NB and Fidelity Bank.
NEM Insurance and Beta Glass were the best performing stocks, gaining 10% each, closing at N16.50 and N250.95per share respectively on the back of sentiment and market forces. On the flip side, Eterna and NSL Tech lost 10% and 9.68% respectively, closing at N38.70and N0.56 per share, purely on selloffs and profit taking.
Market Outlook
We expect positive sentiments to continue on bargain hunting and sector rotation, as investors buy into value in expectation of audited corporate earnings of March year end and others in the midst of portfolio reshuffling, even as few audited accounts are expected to hit the market with dividend announcement.
Also, sector rotation and portfolio rebalancing continued in the market with investors taking advantage of price correction to buy into value. This is amid the volatility and pullbacks that add more strength to upside potential. Consequently, investors should take advantage of price correction. Also looking at the trends and events across the globe and domestically.
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The NGX 2025 market volatility has continued to create wealth for smart traders and discerning investors who took action, or are ready to take action. If you have been wondering:
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CRO|Investdata Consulting Ltd
ambrose.o@investdataonline.com
Tel: 08028164085, 08179547605
