Market Update for May 12
Trading on the Nigerian Exchange started the week negative, thereby extending the pullbacks for the second successive session in the midst of a systematic buying and selling that resurfaced in the previous session, reflecting the impact of short-term profit booking by traders. This situation weighed on the key indicators as they closed lower on a low traded volume, signaling a new trend in the face of selling sentiments and positive market internals, while also indicating supply removal to usher in smart money to markup prices. This needs confirmation as trading opens on Tuesday.
The selling pressure and pullbacks witnessed in the last two trading sessions due to profit taking ahead of the Q1 2025 GDP report, April consumer price index and this month’s policy meeting of the Central Bank of Nigeria, together signal a wait-and-see attitude among market players in the midst of impressive corporate earnings and sector rotation. Also, the global trade war tension is gradually cooling off with the recent move by the US and China to lower tariffs and allow for a 90-day negotiation period, just as the U.S already a signed trade deal with the UK. The stocks with earnings momentum have been the attraction of market players, especially investors, while traders continue trading the momentum, price action and market structure while timing their trades for entry and exit amid continuing portfolio rebalancing on the exchange.
In the seven trading days so far this May, the NGX has recorded five up markets and two sessions of decline, even as the market waits to see the NGX historical data and trend and whether it will once again defy the trade mantra of sell in May and comeback in October. This trend is likely to repeat itself as more audited accounts are expected especially the March financial year-end and payment of dividend declared to support funds flowing into the market as investors reinvest their dividends.
Monday’s pullback was attributed to profit taking in large cap stocks, despite the positive market breadth at the end of the session. Traders and investors should continue to navigate and watch the trend to take advantage of the pullbacks to buy more on the strength of companies’ performance and value, 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 had shifted to indicates funds are leaving the market to reflect profit taking and pullbacks that presents opportunities to buy low and sell high in the midst ongoing volatility and mixed sentiment. As the index closed lower on selling momentum and profit 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 recovery and 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 23.53 points, while RSI and Money Flow Index were down at 66.81 and 76.07 points against the previous session’s 69.68 and 81.86 points respectively. At this state of the market, players should watch the trend and trade wisely in the midst of funds leaving the market on a selling sentiment in some sectors and position 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 Trump tariffs policy easing.
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 on Monday jumped up to continue its oscillation, as it trades at $66.24 per barrel, in the midst of US-China trade talk pointing positive outcome that triggered sentiment in the market. Even as OPEC moves to hike production in the coming months. Even as US-Russia peace talk and ceasefire in Ukraine continued as Russia and Ukraine president’s plan to meet on Thursday. The trade tariffs negotiations and white house talks flying to drive sentiment 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.
Meanwhile, Monday’s trading opened on the downside and it was sustained throughout the session, on selloff in some banking and consumer goods stocks, while buying interest in other sectors. This situation pushed the NGX’s index to intra-day low of 108,468.00bps from its highs of 108,750.60bps, before closing below its opening level at 108,468.00bps.
Market technicals were mixed and weak with lower volume when compared to previous session in the midst of breadth favoring the bulls on a selling pressure as revealed by Investdata’s Sentiments Report showing 0% buy position and 100% sell volume. The total transaction volume index stood at 0.86points, just as energy behind the day’s performance was strong, even when Money Flow Index inched lower to read 76.07pts, from the previous day’s 81.86pts, indicating that funds left the market.
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Index and Market Caps
The benchmark NGX All-Share Index at the end of trading shed 265.42 basis points, closing at 108,467.98bps from 108,733.40bps, representing a 0.24% decline, while market capitalization fell by N167bn, at N68.17tr from the previous day’s N68.41tr, representing a 0.24% depreciation in value.
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The downturn was driven by profit taking in MTNN, NB, Dangote Sugar, Zenith Bank, Nahco, Honeywell, FCMB and Vitafoam, among others. This impacted negatively on Year-To-Date gain which inched lower to 5.38%, while Market capitalization gain stood at N8.42tr, representing 8.41% increase over its opening level for the year.
Mixed Sector Indices
Out of the five sectoral indexes, three closed in green while two were down. As NGX Consumer Goods and Banking indexes closed lower by 0.54% and 0.24% respectively, while NGX Oil/Gas index led the advancers after gaining 0.36% followed by Insurance and Industrial goods with 0.29% and 0.12% respectively.
Market breadth was positive as gainers outnumbered losers in the ratio of 34:28, while transactions in volume and value were down, after investors exchanged 414.35m shares worth N10.60bn, with volume driven by trades in Tantalizer, VFD Group, Accesscorp Zenith Bank and Aiico.
Meyer and Multiverse were the best performing stocks, gaining 10% each, closing at N8.80 and N11.00 per share respectively on the back of sentiment and market forces. On the flip side, Etranzact and Johnhotl lost 10% and 9.48%, closing at N5.40 and N5.25per share, purely on profit taking.
Market Outlook
We expect mixed sentiments on continued profit taking and sector rotation, as investors take advantage of the pullbacks 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
