Market Update for May 20
The Nigerian equity market rebounded on Tuesday, wiping away its previous loss position on increased buying interest in bellwether stocks and blue-chip companies, a situation that weighed positively on the benchmark NGX All-Share index as it closed marginally higher on a flat market breadth and low traded volume. Market players were cautious during the session as they awaited the policy meeting’s outcome. When the meeting ended at the Central Bank of Nigeria (CBN, the committee members voted to leave the monetary policy rate unchanged at 27.50% to further observe developments within the economy till their next meeting in July, amid the shift in global economic fundamentals.
The last-minute positioning in the market after the news of MPC meeting pushed some stocks to a new 52 week high, even as the NGX index’s action formed a topping chart pattern that signals reversal or continuation if there is a breakout which needs confirmation as trading opens at midweek. The benchmark index tested 109,800.80 basis points during session to remain at the point of breakout or pullback.
Strong buying sentiment and momentum are still evident in the market, despite the global stock markets shaking out the recent downgrade of the U.S credit rating, as this market closed higher in the face of mixed economic data from the US and China.
Investors should at this point target stocks with strong earnings momentum that will impact price in the short to long run. Traders should continue to trade momentum, price action and market structure while timing their trades for entry and exit amid continuing portfolio rebalancing on the exchange.
The NGX witnessed slowdown in funds inflow, despite the positioning in mid and highly capitalized stocks. Market players should continue to navigate and watch the trend to take advantage of the uptrend and buy into value on the strength of companies’ performance and prospect, by targeting fundamentally sound companies and defensive stocks with strong earnings power and positive technicals in the face of sector rotation persisting. The market is still at its recovery wave, even as it’s retracing up in the midst of sector rotation, consolidation moves in some industries and sectors.
Technically, money flow and other momentum tools were mixed to indicates funds entering the market on buying momentum that presents opportunities to buy low and sell high in the midst ongoing volatility and recovery. As the index closed higher on a positive momentum and position taking, thereby creating the perfect setup for high probability of continuation to catch Q1 numbers to reposition at the right price. Just as, the index still trades above T-line and the two moving averages of 50-EMA and 50-SMA, that revealed strength in the midst of changing market fundamentals and technicals on the NGX and the economy.
Market metrics as revealed by candlestick formation and momentum indicators, shows that the ADX is looking up to read 27.44 points, while RSI and Money Flow Index were mixed at 72.84 and 83.01 points against the previous session’s 73.00 and 83.01 points respectively. At this state of the market, players should watch the trend and trade wisely in the midst of distribution 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 that look inconsistent and global economic outlook in the face of easing trade war and geopolitical tension.
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.
Meanwhile, transaction volume rose marginally amid selling pressures in Fidelity Bank in apparent reaction to news that broke out Monday about a possible winding down action arising from a judgement debt, which the bank explained in a statement through the Nigerian Exchange Limited portal early on Tuesday morning. The bank came under pressure as it led the volume chart with 60.18m units.
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Index and Market Caps
The NGX All-Share Index gained 0.03%, while market capitalisation closed at 109,730.47 basis points and N68.97tr respectively, reflecting a rebound from previous session.
Attention: If you have not signed up for INVESTDATA’s buy and sell signal setup, don’t delay, because the number of stocks entering their oversold range has increased as market correction and volatility call for intelligent trading and positive chart patterns to be on our watchlist. These stocks have potentials to retrace, considering their earnings prospects and the oscillating moves in an upmarket and weak economy.
To become a member, send ‘YES’ or ‘STOCKS’ to the phone numbers below. Take advantage of this service to buy right and sell right at the current oscillating market in the midst of earnings season, portfolio reshuffling, and repositioning as we await an economic reform policy that can stimulate and re-track the economy to the path of growth and development.
Tuesday’s rebound was boosted Nestle and NB, while Fidelity Bank lost 5% and FirstHoldco, 0.8%. This left Month-to-Date and Year-to-Date returns at +3.7% and +6.6%, respectively.
Ambrose Omordion
CRO|Investdata Consulting Ltd
ambrose.o@investdataonline.com
Tel: 08028164085, 08179547605
