Market Update for August 13
It was a mixed session the Nigerian Exchange at midweek, as the benchmark NGX All-Share index consolidated in the face of profit taking and sector rotation ahead of inflation reports that will further shape market players decision and likely direction of interest rate in the upcoming policy meeting of CBN in September.
Meanwhile, the selling sentiment at the overbought zone signals the possibility of marginal correction underway, the expanding positive market breadth and funds entering the financial services sector stocks. These are signs of topping market that called for cautious trading and investing, accept targeting value and defensive sectors and stocks ahead last quarter of 2025 that comes with seasonality, interpretation of Q3 numbers and other. Money flow index looking down or flat at this level indicates slowdown of smart money in the market despite the seeming high volume been traded.
The seeming pullback at midweek halted the previous sessions marginal gains on increasing selling sentiment across some major sectors. As some highly priced stocks and others appreciated to hit new 52-week highs across some major sectors of the market. This has revealed strong momentum in the market as money flow index inched up read 86.49points. This was as a result of renewed investors interests and confidence while accumulating low, mid and high stocks during the session.
The top chart pattern formation in the midst of consolidation and marginal increase in volume traded, as revealed by the volume pattern higher than the previous session and calls for caution as mentioned earlier, there is the possibility of a reversal, just as there is a 50-50 chance of the continuation of trend. This possibility needs a confirmation as trading opens on Thursday with expectation of positioning and profit taking in the market ahead of interim dividend expectation from banks and markdown from others sectors .
The market is still at a critical level of either a reversal, or continuation of uptrend, with strong momentum as all eyes are on macroeconomic data for insight. Any pullback at this point will create opportunities for new entry and bargain hunting into value stocks and defensive companies and sectors, as the market expects more companies to beat investor expectations. These will further boost market confidence, as government’s economic reforms impact positively on the economy, while foreign investors are also seeing value in the NGX, a situation that has attracted inflow of funds into the market and the economy at large.
The optimism of US -China tariff truce extension for the two countries to reach agreement on trade tariff, coupled with the peace talk again to end Middle East conflicts and the war in Ukraine to restore peace that will drive global economic recovery and stability. August 12, 2025 deadline for China and US as market awaits the next move. The mixed sentiment in major stock markets of the world has been as a result Trump leadership pattern and policy statements here and there. 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 mixed, indicating that funds are entering the market on position taking and profit booking that presents opportunities to buy low and sell high in the midst ongoing volatility and overbought state of NGX. The index inched up on a selling sentiment, thereby creating the perfect setup for high probability of continuation to catch good entering position 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 continued to signal overbought market as it reads 92.70.
Market pulse as revealed by the candlestick formation and momentum indicators shows that the ADX is very strong to read 91.05points, while RSI and Money Flow Index were mixed at 91.39 and 80.22points against the previous session’s 92.75 and 78.53 points respectively. NGX at this point call for players to be watchful and trade wisely in the midst of distribution phase and mixed 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 at midweek inched lower to continued its oscillation, trading at $62.68per barrel, in the midst US crude build and expected outcome of Trump and Putin peace talk on Ukraine war. Even in the face of geopolitical uncertainty in Mideast where peace talks are shaking. As OPEC production hike misguide the market. The ongoing developments will trigger disinflation and rate cuts if peace is achieved. All eyes are on policy meeting of major central banks of the world in September. 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.
Midweek trading started in the upside before pulling back on selloffs and profit taking in BUA Cement and others, despite the oscillation and buying interest insurance stocks and others. This situation pushed the index to its intra-day low of 145,780.10bps from its highs of 146,272.60bps, before closing below its opening level at 145,865.50bps.
Market technicals were positive and mixed with higher 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 17% buy position and 83% sell volume. The total transaction volume index stood at 1.14points, as impetus behind the day’s performance was strong, as Money Flow Index was up to read 80.22pts, from the previous day’s 78.532pts, indicating that funds entered the market.
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Index and Market Caps
The composite NGXASI, at the end of session trading lost 192.37bps, closing at 145,866.48bps from 146,055.21bps, representing a 0.13% drop, while market capitalization fell by a further N43 billion to close at N92.28tr from the previous day’s N92.43tr, representing a 0.13% value loss.
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This session upturn was driven by profit taking in the shares of BUA Cement, Berger Paints, Champion,UPDC and Wapco among others, which impacted positively on Year-To-Date gain which inched higher to 41.72% while Market capitalization gain stood at N46.12tr, representing 47.04% increase over its opening level for the year.
Mixed Sector Indices
Sectoral performance indexes were mixed, as the NGX Insurance and Energy closed higher with 7.94% and 0.12% respectively, while NGX Consumer goods index led the decliners after losing 0.91%, followed by Banking and Industrial goods with 0.53% and 0.33% respectively.
Market breadth was positive as gainers outnumbered losers in the ratio of 52:20, while activities in volume and value were mixed, after investors exchanged 1.34billion shares worth N20.21bn, with volume driven by trades in Universal Insurance, Japaul Gold, Verita Kapital, Accesscorp and SterlingNG.
Caverton and Prestige Assurance were the best performing stocks, gaining 10% each, closing at N7.70 and N2.42 per share respectively on the back of sentiment and market forces. On the flip side, Thoma watt and UPDC lost 10% and 7.94% respectively, closing at N3.42 and N8.00per share, purely on selloffs and profit booking.
Market Outlook
We expect mixed sentiments to continue on profit taking and sector rotation ahead of July CPI. As players digest the companies numbers in the midst bargain hunting and cautious trading, while investors buy into value in the midst of portfolio reshuffling, even as few quarterly reports are expected to hit the market.
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
