Market Update for July 7
Trading activities on the Nigerian Exchange started the week on a positive note, sustaining the previous session and week’s bullish momentum and sentiment in the face of continued sector rotation and portfolio rebalancing ahead of expected macroeconomic data and corporate earnings to offer insights and guide market players. The composite NGX All-Share index’s action continued to make new all-time high, even as more stocks hit their 52-week highs due to inflow of funds into the equity space with buying sentiment across the low, mid and large cap stocks including blue chip companies. It is also noteworthy that the index’s action formed a top chart pattern that signals reversal or continuation of trend which needs confirmation as trading opens on Tuesday.
The benchmark NGX All-Share index closed higher on an above average traded volume and positive market breadth in the midst of buying sentiment to breakout the previous high of 121,264.20 basis point, testing the 121,378.00 basis points level before settling at 121,362bps to extend the markup phase. The NGX at this point is at a cross road of fake-out or continued uptrend depending on market forces, even as the market is already at its overbought region with strong momentum that called for cautious trading and profit taking.
As market players continued to interpret and digest the March year-end numbers and dividend payouts, with companies notifying the exchange of board meeting to approve quarterly earnings reports as all eyes on consumer price index report for the month of May; first half earnings reporting season and the Central Bank of Nigeria policy meeting slated for July 20-21. This recovery creates opportunity for new entry and bargain hunting, as the market consolidates in the face of phase within the consolidation range, especially if the expected corporate numbers beat market expectation in the face of the Monetary Policy Rate remaining unchanged at the forthcoming policy meeting of the CBN.
Despite the marginal drop in volume, the presence of smart money is still obvious in the market as stock prices are rallying in the midst of strong positive market internals while investors are taking advantage of any pullback to buy into value ahead of company’s numbers. market confidence around government’s economic reforms, while foreign investors are also seeing value on the NGX, a situation that has supported inflow of funds into the market and the economy at large. Nevertheless, the expected mixed trend in Q3, may not halt the bull trend if the expected corporate earnings beat expectation. Already, the slowdown in fixed income market rates has triggered money flowing into the market as last week’s TB primary market auction rate declined across all tenors.
All eyes are on U.S President Donald Trump’s tariffs deadline and letters to trade partners, as events continue unfolding in the midst of geopolitical tensions, global uncertainties due to the Middle East ceasefire moves for peace talk, which had impacted mixed sentiment on the major stock markets of the world. Nonetheless, there is need to avoid panic selling, even as profit booking could arise.
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 up indicating that funds are entering the market on position taking that presents opportunities to buy low and sell high in the midst ongoing volatility and overbought state of NGX. The index inched higher on a buying interest, thereby creating the perfect setup for high probability of continuation to catch better-than-expected corporate earnings to reposition 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 80.75, which also called for cautious trading and know when to cash out profit even when taking positions.
Market pulse as revealed by the candlestick formation and momentum indicators shows that the ADX is strong to read 66.01points, while RSI and Money Flow Index were up at 80.75 and 69.82 points against the previous session’s 79.82 and 63.01 points respectively. NGX at this point call for players to be watchful and trade wisely in the midst of markup 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 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 on Monday inched lower to continued its oscillation, trading at $68.02 per barrel, in the midst of uncertainty and concerns over tariffs deadline. Also, the ceasefire in Mideast for peace talks that continues to hold, and Ukraine-Russia war. Even as OPEC production hike misguide the market. The ongoing developments will deflate inflation and rate hikes if peace is achieved. All eyes are on oil cartel meeting this weekend. 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.
Monday’s trading opened in the upside and was sustained for the rest of the session, despite oscillating on position taking in blue chip companies and other stocks. This situation pushed the NGX’s index to intra-day high of 121,378bps from its lows of 120,989bps, before closing above its opening level at 121,362.00bps.
Market technicals were strong and positive with lower volume when compared to previous session in the midst of breadth that favors the bulls on a buying sentiment as revealed by Investdata’s Sentiments Report showing 96% buy position and 4% sell volume. The total transaction volume index stood at 1.06points, just as energy behind the day’s performance was relatively strong, as Money Flow Index was inched higher to read 69.82pts, from the previous day’s 63.01pts, indicating that funds entered the market.
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Index and Market Caps
At the end of the trading session, the NGXASI gained 371.59 basis points, closing at 121,362bps from 120,990.30bps, representing a 0.31% growth, while market capitalization rose by N345.43 bn to close at N76.85tr from the previous day’s N76.17tr, representing a 0.31% appreciation in value.
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The upturn was driven by accumulation and buying interest in the shares of First Holdco, Oando, Wema Bank, Cadbury, Zenith Bank, Accesscorp, NB NGXGroup and GTCO among others, which impacted positively on Year-To-Date gain which inched higher to 17.85% while Market capitalization gain stood at N22.74tr, representing 21.89% increase over its opening level for the year.
Bullish Sector Indices
Sectoral performance indexes were up except for the NGX Industrial Goods that closed flat, while NGX Banking index led advancers after gaining 0.94%, followed by Insurance, Consumer good and Energy with 0.75%, 0.39% and 0.01% respectively.
Market breadth was positive as gainers outnumbered losers in the ratio of 51:21, while activities in volume and value were up, after investors exchanged 842.16 million shares worth N14.44bn, with volume driven by trades in Universal Insurance, FCMB, Japaul Gold Accesscorp and Chams.
Ellah Lakes and Cadbury were the best performing stocks, gaining 10% each, closing at N8.91 and N53.35 per share respectively on the back of sentiment and market forces. On the flip side, Sunu Assurance and RT Brisco lost 10% and 9.50% respectively, closing at N4.50 and N3.30 per share, purely on profit taking and selloffs.
Market Outlook
We expect mixed sentiments on profit taking, bargain hunting and sector rotation, as investors digest March year-end accounts and dividend payout and buying into value 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
