Market Update for February 27

The bear sentiment on the Nigerian Exchange resurfaced Thursday in the midst of buying interest and profit taking as market players digest audited corporate earnings released so far ahead of month end that ushered in the peak of earnings reporting season and the last month of first quarter 2025. Macroeconomic data recently made available looks good on the strength of the rebasing moves by the economic managers to reposition the economy for growth and development. The composite NGX All-Share index closed lower, reversing the previous gain on an above average traded volume and positive market internals to reflect strategic positioning and selloffs on the exchange.

The downtrend amid the ongoing portfolio rebalancing across the financial market and declining yields in the fixed income market, as all eyes are on dividend announcements and audited financial statements to give the market direction. Despite the changing market fundamentals that called for new strategies to protect capital and profit from the season.  The ongoing profit taking across the major sectors of the market supports dividend income positioning and higher yields. This decline phase of the market is a sign of weakness  that provide opportunity  for players to buy into value, as assets revaluation reveal upside potential  inherent in the different stocks and sectors.

This wave of corrections and funds leaving the market are short-term realities of any market across the globe which are driven by market dynamics in repositioning and preparation for more audited scorecards and dividend expectation. Importantly also at this period are dividend payout and yields which remain very important to players at a time like this, when prices are looking down. Knowing that different phases of the market comes with its own opportunities and risk, especially with reactions to earnings as market players are studying corporate  numbers and rate direction of the apex bank.

At the current phase of the NGX, investors should target dividend paying companies, defensive stocks as pullbacks will impact dividend yields positively and provide room for higher upside that support capital gain. This is due to market had entered overbought region that signal  price adjustment and correction  in the midst of  selling sentiments for some sectors, consolidation moves in some industries and expectations of positive corporate numbers from some others, based on their quarterly and full year unaudited performance, coupled with their  dividend payouts history.

Technically, money flow and other momentum tools were down, revealing weakness and  present opportunities of buying low and selling high in the midst ongoing volatility and mixed sentiment. The index inching down further signal caution thereby creating the perfect setup for high probability of continuation to catch dividend season repositioning at the right price. Also, as the index trades below the T-line and above the two moving averages of 50-EMA and 50-SMA, this indicates relatively strength in the face of changing market fundamentals and technicals on the NGX and the economy.

The NGX index’s action downtrend in the midst of selling sentiment, as revealed by candlestick formation and momentum indicators. As ADX inched down to read 44.77points, while RSI and Money Flow Index were down at 62.01 and 46.36 points against the previous session’s 63.26 and 53.27 points respectively. Consequently, market players should watch this current trend and trade wisely in the face of funds leaving the market on a mixed sentiment in some sectors and profit taking in others on a daily time frame. Also, trading volume pattern continued to oscillates, suggesting smart money are locking in traders into bad position amid players revaluing 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 trade war tension.

To navigate the rest of Q1 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 headed for six month low to continue its oscillation, as it trades at $72.90 per barrel in the midst of global economic growth uncertainty and increasing US inventory. As Russia-Ukraine peace talk continued in the face of fear on cooling US economy and inflation pressure due to Trump tariffs regime. Even as OPEC rethinking production rampup  on US government moves on trade war. As all eyes are on US President Policy uncertainty continued to drive volatility.  The geopolitical tension across many economies remains a 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, even as the raging war between Ukraine and Russia continues to influence global oil supply and demand.

Meanwhile, Thursday’s trading opened on the upside before pulling back at midday and was sustained for the rest of the session on profit taking across the major sectors. The situation pushed the NGX’s index to an intra-day low of 107,572.20bps from its highs of 107,987.30bps, before closing below its opening level at 107,657.50bps.

Market technicals were mixed and weak with higher volume when compared to the previous session in the midst of breadth favoring the bears on a selling sentiment as revealed by Investdata’s Sentiments Report showing 25% buy position and 75% sell volume. The total transaction volume index stood at 0.88points, just as impetus behind the day’s performance was relatively weak as Money Flow Index inched lower to read 46.38pts, from the previous day’s 53.27pts, indicating that funds left the market.

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Index and Market Caps

The benchmark NGX All-Share Index shed 123.53 basis points, closing at 107,675.46bps from 107,798.99bps, representing a 0.11% drop, while market capitalization fell by N76.99bn, at N67.10r from the previous day’s N67.18tr, representing a 0.11% value loss.

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The downturn was driven by profit taking and selloffs in the shares of Wapco, ETI, Fidson, International Breweries, Mansard, FCMB, NGXgroup and Lasaco, among others. This impacted mildly on Year-To-Date gain that inched lower to 4.61%, while Market capitalization gain stood at N5.28tr, representing 7.02% increase over its opening level for the year.

Bearish Sector Indices

Sectoral performance indexes were down, save for NGX Energy index that closed higher by 0.88%, while  NGX Insurance index  led the decliners after losing  0.92%, followed by Banking, Industrial and Consumer  goods with 0.75%, 0.43% and 0.17% respectively.

Market breadth was positive, as gainers outnumbered losers in the ratio of 28:23, while activities in volume and value were up after investors exchanged 423.42 million shares worth N9.57bn. Volume was driven by trades in FCBM, Zenith Bank, Accesscorp, Jaiz Bank and Caverton.

PZ and Oando were the best performing stocks after gaining 10% each, closing at N29.50 and N52.80 per share respectively on the back of sentiment and market forces. On the flip side, Fidson Healthcare and ETI lost 9.60% and 9.51%, closing at N17.90 and N31.40per share, purely on profit taking.

Market Outlook

We expect mixed sentiment to continue as investors reacts to latest corporate earnings and corporate actions in the midst profit taking and portfolio reshuffling. Even as more earnings reports 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

info@investdata.com.ng

ambrose.o@investdataonline.com

ambroseconsultants@yahoo.com

08028164085