Market Update for May 21
The seesaw movement on the Nigerian Exchange continued at the midweek as revealed by the index’s action reflecting the broad market’s buying position in the midst of profit taking as market players digest the outcome of the latest policy meeting of the Central Bank of Nigeria (CBN). The benchmark NGX All-Share Index closed lower on a very high traded volume and positive market internals, ranging after the index formed a double top reversal chart pattern that signals pullback, or continuation of trend in the ongoing distribution phase of the NGX which needs confirmation as trading opens on Thursday.
The market volatility is largely driven by profit taking in some blue-chip companies and large cap stocks that had supported this recovery so far, as some stocks hit their new 52-week high. Cautious trading and profit taking seems to follow the prevailing sentiment after the CBN retained the Monetary Policy Rate at 27.50%. The index during the session touched 109,877.08 basis points, side trending. Wait for a trigger to breakout, or decline. The mixed 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.
At the current phase of the NGX, players should target stocks with strong earnings momentum that will impact price in the short to long run. As they watch momentum, price action and market structure while timing their trades for entry and exit amid continuing portfolio rebalancing on the exchange. NGX witnessed a slowdown, even when funds entered the market, despite the sell pressure in some mid and highly capitalized stocks, investors and traders should continue to navigate and watch the trend to take advantage of pullbacks 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 indicate funds entering the market on selling momentum that presents opportunities to buy low and sell high in the midst ongoing volatility and recovery. The index inched lower on a mixed momentum and profit taking, thereby creating the perfect setup for high probability of continuation to catch a better-than-expected corporate earnings to reposition at the right price. Also, the index still trades 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 as revealed by candlestick formation and momentum indicators, shows that the ADX is looking up to read 29.04 points, while RSI and Money Flow Index were mixed at 71.40 and 81.58 points against the previous session’s 73.01 and 75.52 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.
Oil prices at midweek inched up to continue its oscillation, as it trades at $66.37 per barrel, in the midst of reports of a potential Israeli attack on Iranian nuclear facilities and downgrading of US credit rating. As mixed macroeconomic data emanating from US and China. Even as OPEC production drop for month in the face of planning to hike output. Even as US-Russia peace talk and ceasefire in Ukraine continued to shake. The trade tariffs negotiations slowing down fear of global recession and global 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 started in the upside but pulled back at midday on profit taking which was sustained throughout the session, on selling pressure in banking stocks and others, while positioning in others. This situation pushed the NGX’s index to intra-day low of 109,595.40bps from its highs of 109,877.10bps, before closing below its opening level at 109,619.10bps.
Market technicals were positive and mixed with higher volume when compared to previous session in the midst of breadth that favours the bulls on a selling sentiment as revealed by Investdata’s Sentiments Report showing 8% buy position and 92% sell volume. The total transaction volume index stood at 1.37points, just as impetus behind the day’s performance was strong, as Money Flow Index was up to read 81.58pts, from the previous day’s 75.52pts, indicating that funds entered the market, despite closing lower.
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Index and Market Caps
The benchmark NGX All-Share Index shed 111.37 basis points, closing at 109,619.10bps from 109,710.72bps, representing a 0.10% drop, while market capitalization lost N70bn, at N68.90tr from the previous day’s N68.92tr, representing a 0.10% deprecation in value.
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The downturn was driven by profit booking in Oando, Accesscorp, Fidelity Bank, UBA, ABC Transport, Champion and International Breweries, among others, which impacted mildly on Year-To-Date gain which inched lower to 6.50 while Market capitalization gain stood at N9.12tr, representing 9.78% increase over its opening level for the year.
Mixed Sector Indices
Sectoral performance indexes were mixed, as the NGX Insurance and Consumer Goods indexes closed 1.14% and 0.49% higher respectively, while the NGX Banking index led the decliners, losing 0.82% followed by Energy and Industrial goods with 0.48% and 0.11% respectively.
Market breadth was positive as gainers outnumbered losers in the ratio of 29:27, while transactions in volume and value were mixed, after investors exchanged 664.14m shares worth N13bn, with volume driven by trades in Japaul Gold, Tantalizer, Fidelity Bank, NB and Custodian Investment.
RT Brisco and Eunisell were the best performing stocks, gaining 10% and 9.75%, closing at N2.09 and N12.95 per share respectively on the back of sentiment and market forces. On the flip side, The Champion Breweries and Lasaco lost 10% each, closing at N7.20 and N2.52per share, purely on profit taking.
Market Outlook
We expect mixed sentiments on profit taking and bargain hunting, as investors take advantage of pullback to buy into value in expectation of more corporate earnings reports 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
