Market Update for June 2
The dicey month of June started on a mixed session and positive outing on the Nigerian Exchange, thereby extending the month of May’s bullish run in the midst of NGX distribution phase and buying sentiment. The index’s action broke out the 112,000 basis points psychological line again to form a topping chart pattern that supports reversal or continuation of trend depending on market forces as trading opens on Tuesday.
Despite the bullish sentiment, market internals were negative on a low traded volume to reflect mixed session of profit taking and positioning in the market, even as the benchmark NGX All-Share Index closed higher on a ranging move of consolidation.
The volatility was largely driven by bargain hunting across low, mid and large cap stocks that weighed the rebound after two consecutive sessions of bear dominance to end the month of May. This recovery resulted as some stocks hit new 52-week highs ahead of index breaking out the 200 moving average and the new all-time high of 112,237.30 level. At the current stage of the NGX, players should trade with cautious, as purchasing managers index for the month of May revealed that although there was an increase in business activities, but growth eased to a four-month low after reading 52.7 points from 54.2 in April.
The NGX index tested 112,048.30 basis points, side trending, but wait for a trigger to breakout, or decline. The buying sentiment and momentum are still evident in the market, despite the global stock markets shaking again on the fallout of US-China trade tariffs negotiation in the face of mixed economic data from the two largest economies.
At this point, investors and traders should 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 slight gain, even when funds entered the market, despite profit booking in some mid and blue-chip companies, just as players continue to navigate and watch the trend to take advantage of any 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 marginally up, indicating that funds are entering the market on buying momentum that presents opportunities to buy low and sell high in the midst ongoing volatility and recovery. The index inched up on a mixed session of buying interest and profit taking, 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 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.
Investors sentiment as revealed by candlestick formation and momentum indicators, shows that the ADX is looking up to read 36.74 points, while RSI and Money Flow Index were slightly up at 77.01 and 58.08points against the previous session’s 75.83 and 57.92 points respectively. At this juncture, 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 profit 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 Monday was up to continue its oscillation, as it trades at $65.12 per barrel, in the midst of re-escalation of trade war and OPEC planning to increase output in July. As mixed macroeconomic data continued to emanate from US and China. Even as US-Russia peace talk and ceasefire in Ukraine continued to shake. The trade tariffs negotiations seem to have fallout to signal global recession and weak 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.
Monday’s trading opened in the downside before rebounding at midday on position taking which was sustained for the rest of the session, despite oscillating on profit taking in banking stocks and others, while positioning in others. This situation pushed the NGX’s index to intra-day high of 112,048.30bps from its lows of 111,651.00bps, before closing above its opening level at 112,045.30bps.
Market technicals were mixed and weak with lower volume when compared to previous session in the midst of breadth that favours the bears on a buying sentiment as revealed by Investdata’s Sentiments Report showing 94% buy position and 6% sell volume. The total transaction volume index stood at 0.91points, just as energy behind the day’s performance was relatively strong, as Money Flow Index was inched up to read 58.08pts, from the previous day’s 57.92pts, indicating that funds entered the market.
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Index and Market Caps
The NGX All-Share Index gained 273.94 basis points, closing at 112,045.30bps from 111,742.01bps, representing a 0.25% up, while market capitalization rose by N72.75bn to close at N70.64tr from the previous day’s N70.24tr, representing a 0.25% appreciation in value.
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The upturn was driven by position taking in MTNN, Dangote Sugar Oando, Livestock Feeds, Multiverse, Lasaco and Neimeth Pharm, among others, which impacted mildly on Year-To-Date gain which inched up to 8.84 while Market capitalization gain stood at N12.45tr, representing 12.55% increase over its opening level for the year.
Mixed Sector Indices
Sectoral performance indexes were mixed, as the NGX Insurance and Energy indexes closed 0.85% and 0.24% higher respectively, while the NGX Consumer goods index led the decliners, losing 0.08% followed by Banking and Industrial goods with 0.06% and 0.02% respectively.
Market breadth was negative as losers outnumbered gainers in the ratio of 37:26, while transactions in volume and value were down, after investors exchanged 517.95m shares worth N10.07bn, with volume driven by trades in Fidelity Bank, Royal Exchange, Accesscorp, Cutix and Ucap.
Multiverse and Livestock Feeds were the best performing stocks, gaining 9.87% and 9.57%, closing at N8.35 and N10.30 per share respectively on the back of sentiment and market forces. On the flip side, The Legend Internet and NST lost 9.90% and 9.84% respectively, closing at N5.55and N0.55 per share, purely on selloffs and profit taking.
Market Outlook
We expect mixed sentiments on bargain hunting and profit booking to continue, as investors take advantage of pullback to buy into value in expectation of March year end 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
