Market Update for June 4
The strong sentiment and trend on the Nigerian Exchange continued at the midweek as market players continued repositioning their portfolios ahead of the earnings reporting season, while others took profit ahead of the long holidays to mark the Muslim festival of Id el Kabir in the midst of the benchmark NGX All-Share index making a new historic all-time high in divergence with money flow index looking down. This deviation between the index action and money flow signals a red flag regarding the current uptrend, because when volume is rising and momentum is increasing but money flow is falling, it is a warning about an impending pullback. With money flowing in and out of the market since the beginning of the month, what does the overall sentiment mean for the longer-term momentum? Will this uptrend continue or reverse? There is need to avoid panic selling, or the fear of missing out in this market scenario, but let your trading plan and investment objective guide your entry and exit.
The key index of the NGX hit yet another new high of 112,781.7 basis points and market capitalisation of N71.12tr for the first time in the history of Nigerian stock market on a less than average traded volume and positive market breadth. This has been driven largely by corporate earnings in the face government economic reforms and corporate managers taking advantage of headwinds to boost their performance, thereby impacting investor confidence and ongoing positive market sentiments. Some stocks hit new 52-week highs just as the index’s action is set to breakout the 200 moving average. The buying sentiments are still evident in the market, despite the global stock markets recording mixed trend due to US-China trade tariffs negotiation in the face of mixed economic data from the two largest economies. Already new tariffs regime will take effect from today in US, so far only UK has been able to take the advantage of the negotiation period to have a deal with US on trade policy.
Traders and investors should watch momentum, price action and market structure while timing their trades for entry and exit amid continuing portfolio rebalancing on the exchange.
The NGX had another gain with funds leaving the market, despite position taking in some mid and blue-chip companies, as players continue to navigate and watch trends, targeting value on the strength of companies’ performance and prospect, looking at growth and defensive stocks with strong earnings power and positive technicals in the face of sector rotation persisting. The market is still on a strong 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, indicating that funds left the market on buying momentum that presents opportunities to buy low and sell high in the midst ongoing volatility and uptrend. 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 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 40.18 points, while RSI and Money Flow Index were mixed at 79.88 and 58.09points against the previous session’s 78.58 and 58.58 points respectively. At this juncture, players should watch the trend and trade wisely in the midst of seemingly a 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 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 at midweek slide to continue its oscillation, as it trades at $65.27 per barrel, in the midst of US increasing its inventory and Saudi cutting its oil price. Even as OPEC goes front and back on increasing production or cut output. As soft macroeconomic data emanating from US and China remain a concern for players. 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.
Midweek trading opened in the upside and it was sustained throughout the session on buying interest cross the major sectors of the market, despite oscillating slightly on profit taking in other stocks. This situation pushed the NGX’s index to intra-day high of 112,786.20bps from its lows of 112,428bps, before closing above its opening level at 112,781.70bps.
Market technicals were positive and strong with lower volume when compared to previous session in the midst of breadth that favours the bulls on a buying sentiment as revealed by Investdata’s Sentiments Report showing 99% buy position and 1% sell volume. The total transaction volume index stood at 1.03points, just as energy behind the day’s performance was relatively strong, as Money Flow Index was inched lower to read 58.09pts, from the previous day’s 58.58pts, indicating that funds left the market, despite closing higher.
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Index and Market Caps
The NGX All-Share Index at the close of midweek’s trading gained 354.25 basis points, closing at 112,781.70bps from 112,427.48bps, representing a 0.32% growth, while market capitalization rose by N223.40bn to close at N71.12tr from the previous day’s N70.89tr, representing a 0.32% appreciation in value.
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This session upturn was driven by accumulation in the shares of PZ, Oando, Lasaco, International Breweries, May/Baker, SterlingNG and Royal Exchange, among others, which impacted positively on Year-To-Date gain which inched up to 9.58% while Market capitalization gain stood at N13.45tr, representing 13.25% increase over its opening level for the year.
Bullish Sector Indices
Sectoral performance indexes were higher, except for the NGX Industrial goods index that closed 0.01% lower, while the NGX Energy index led the advancers, gaining 0.92% followed by Banking, Consumer goods and Insurance with 0.87%, 0.50% and 0.35% respectively.
Market breadth was positive as gainers outnumbered losers in the ratio of 31:21, while activities in volume and value were mixed, after investors exchanged 601.53m shares worth N16.68bn, with volume driven by trades in Fidelity Bank, GTCO, Royal Exchange, UBA and Accesscorp.
Oando and Royal Exchange were the best performing stocks, gaining 10% and 8.64%, closing at N51.70 and N0.88per share respectively on the back of sentiment and market forces. On the flip side, NCR and ABC Transport lost 9.89% and 9.83% respectively, closing at N5.92and N2.66 per share, purely on selloffs and profit taking.
Market Outlook
We expect mixed sentiments at historic all-time high on profit taking and bargain hunting to continue ahead of the long holidays, as investors buy into value in expectation of audited corporate earnings of Learn Africa, University Press, Redstar Express and others 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
