Market Update for July 3
The recovery and bullish momentum on the Nigerian Exchange continued Thursday, on the back of a strong buy volume and positive market internals, following sector rotation and portfolio rebalancing by market participants. This is coming ahead of macroeconomic data and corporate numbers expected to give more insights into economic development and market direction.
The NGX extended its rebound and markup phase at the end of the trading session heading back to its peak which was a strong resistance level of 121,264.00 basis points, while waiting for a breakout to confirm a new trend or fake-out. The continued high traded volume and the increased number of stocks making new 52-week highs indicate an inflow of funds into equity space, even when the market is still in its overbought region with strong momentum that called for cautious trading and profit booking.
The buying sentiment pushed the benchmark NGX All-Share index to close higher on accumulation of blue-chip companies and large cap stocks. As market players digest the March year-end numbers and dividend payouts, ahead of the consumer price index report for the month of May; first half earnings reporting season and the Central Bank of Nigeria policy meeting slated for July 20-21. This recovery creates opportunity for new entry and bargain hunting, as the market consolidates in the face of phase within the consolidation range, especially if the expected corporate numbers beat market expectation in the face of the Monetary Policy Rate remaining unchanged at the forthcoming policy meeting of the CBN.
The prevailing volume on the exchange indicates the presence of smart money which may further markup prices in the midst of strong positive market internals while investors latch on any pullback to buy into value ahead of company’s quarterly earnings reports. Investing public confidence around government’s economic reforms, while foreign investors are also seeing value on the NGX, a situation that has supported inflow of funds into the market and the economy at large. Nevertheless, the expected mixed trend in Q3, may not halt the bull trend if the expected corporate earnings beat expectation. Already, the slowdown in fixed income market rates has triggered money flowing into the market as last week’s TB primary market auction rate declined across all tenors.
All eyes are still on the expected economic and corporate numbers, as events continued to unfold in the midst of trade tariffs deadline, global uncertainties due to the Middle East ceasefire moves for peace talk, which had impacted mixed sentiment on the major stock markets of the world.
Nonetheless, there is need to avoid panic selling, even as profit booking could arise. As such, let your trading plan and investment objective guide your entry and exit. It is noteworthy that the improvement in macroeconomic data points to where the domestic economy is heading. This is the time to pay close attention to momentum, price action and market structure while timing your trades and avoiding losing money with your stop loss. While navigating the market and targeting value on the strength of companies’ performance and prospect, focus on 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 down indicating that funds are leaving to the market on profit taking that presents opportunities to buy low and sell high in the midst ongoing volatility and overbought state of NGX. The index pulled back on a selling 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 sentiment and technicals on the NGX. But RSI signal overbought market at the current level or zone, which also called cautious trading and know when to cash out profit even when taking positions.
Investors sentiment as revealed by the candlestick formation and momentum indicators shows that the ADX is strong to read 64.06points, while RSI and Money Flow Index were up at 79.79 and 56.03 points against the previous session’s 78.20 and 55.86 points respectively. NGX at this point call for players to be watchful and trade wisely in the midst of distribution phase and selling 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 present in the market 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 Q3 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 on Thursday slide to continued its oscillation, trading at $69.02 per barrel, in the midst of US crude inventories rising and ceasefire in Mideast for peace talks continues to hold, and Ukraine-Russia war. Even as OPEC call for investment in the industry to avert shortage in supply in 2030. The ongoing developments will deflate inflation and rate hikes if peace is achieved. All eyes are on oil cartel meeting this weekend. Tariffs and geopolitical tensions are already driving mixed macroeconomic data emanating from the U.S and China which remain a concern for investors. Just as uncertainties 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.
Meanwhile, Thursday’s trading opened in the green and it was sustained throughout the session, despite oscillating on position taking in blue chip companies and other stocks. This situation pushed the NGX’s index to intra-day high of 121,082.6bps from its lows of 120.339.90bps, before closing above its opening level at 120,977.20bps.
Market technicals were strong and positive with lower volume when compared to previous session in the midst of breadth that favors the bulls on a selling sentiment as revealed by Investdata’s Sentiments Report showing 84% buy position and 16% sell volume. The total transaction volume index stood at 1.23points, just as energy behind the day’s performance was relatively strong, as Money Flow Index was inched higher to read 56.03pts, from the previous day’s 55.86pts, indicating that funds entered the market.
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Index and Market Caps
At the end of Thursday’s trading, the composite NGX All-Share Index gained 567.83 basis points, closing at 120,977.20bps from 120,339.90bps, representing a 0.53% growth, while market capitalization grew by N403.43bn to close at N76.58tr from the previous day’s N76.17tr, representing a 0.53% appreciation in value.
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The session upturn was driven by accumulation and buying interest in the shares of Oando, Wema Bank, CAP, Unilever, Berger, Zenith Bank, Accesscorp, NB NGXGroup and GTCO among others, which impacted positively on Year-To-Date gain which inched higher to 16.92% while Market capitalization gain stood at N22.45tr, representing 21.89% increase over its opening level for the year.
Bullish Sector Indices
Sectoral performance indexes were up led by NGX Insurance index after gaining 2.76%, followed by Banking, Consumer good, Energy and Industrial goods with 1.29%, 0.74%, 0.69% and 0.34% respectively.
Market breadth was positive as gainers outnumbered losers in the ratio of 53:18, while activities in volume and value were up, after investors exchanged 933.40 million shares worth N29.31bn, with volume driven by trades in Universal Insurance, Accesscorp, Chams, Japaul Gold and GTCO.
Academy Press and Berger Paints were the best performing stocks, gaining 10% each, closing at N5.61 and N33.00 per share respectively on the back of sentiment and market forces. On the flip side, Neimeth Pharm and Legend Internet lost 9.09% and 5.41% respectively, closing at N7.22 and N7.73 per share, purely on profit taking and selloffs.
Market Outlook
We expect mixed sentiments on profit taking, bargain hunting and sector rotation, as investors digest March year-end accounts and dividend payout and buying into value 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.
Ambrose Omordion
CRO|Investdata Consulting Ltd
ambrose.o@investdataonline.com
Tel: 08028164085, 08179547605
