Market Update for June 3
Bullish sentiment and momentum continued on the Nigerian Exchange Tuesday, following increased buying interest in financial stocks and other blue-chip companies that weighed positively on the key performance indicators which closed higher on a new all-time high after testing 112,521.10 basis points. The strong momentum signaled position taking in the midst of less than average traded volume and positive market breadth that indicates a markup phase which needs confirmation as trading opens at midweek.
This notwithstanding, the NGX extended the previous month’s bullish sentiment so far in the new month, market players should trade cautiously and take any opportunity of the pullbacks to reposition their portfolios ahead of Q2 earnings season in July. Also, the NGX tick up on expanding positive market internals in the face of profit taking in some sectors and stocks.
The ongoing volatility was largely driven by bargain hunting across low, mid and large cap stocks that supported the two consecutive sessions of bull run, as some stocks hit new 52-week highs and index action set to breakout the 200 moving average on a new all-time high of 112,427.5 level. The buying sentiments 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. 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.
At this point, traders 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 entering the market, despite profit booking in some mid and blue-chip companies, just 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 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.
Market pulse as revealed by candlestick formation and momentum indicators, shows that the ADX is looking up to read 38.45 points, while RSI and Money Flow Index were up at 78.58 and 58.58points against the previous session’s 77.01 and 58.08 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 on Tuesday inched up to continue its oscillation, as it trades at $65.74 per barrel, in the midst of increasing geopolitical tensions and fresh tariffs threats. 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.
Meanwhile, Tuesday’s trading started slightly in the red before rebounding powerfully in the afternoon and was sustained for the rest of the session on buying interests in highly priced stocks among others. This situation pushed the NGX’s index to intra-day high of 112,521.10bps from its lows of 112,985.50bps, before closing above its opening level at 112,427.10bps.
Market technicals were positive and strong with higher 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 83% buy position and 17% sell volume. The total transaction volume index stood at 1.08points, just as energy behind the day’s performance was relatively strong, as Money Flow Index was inched up to read 58.58pts, from the previous day’s 58.08pts, indicating that funds entered the market.
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Index and Market Caps
At the end of trading, the composite NGX All-Share Index gained 411.53 basis points, closing at 112,427.48bps from 112,045.30bps, representing a 0.37% growth, while market capitalization rose by N259.49bn to close at N70.89tr from the previous day’s N70.64tr, representing a 0.37% value gain.
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Tuesday upbeat was driven by position taking in Dangote Cement, MTNN, First Holdco, May/Baker, Honeywell and University Press, among others, which impacted positively on Year-To-Date gain which inched up to 9.22 while Market capitalization gain stood at N12.84tr, representing 12.93% increase over its opening level for the year.
Bullish Sector Indices
Sectoral performance indexes were in green, save for the NGX Oil & Gas index that closed lower by 0.21%, while the NGX Banking index led the advancers, gaining 1.36% followed by Consumer goods, Industrial goods and Insurance with 1.05%, 0.96% and 0.81% respectively.
Market breadth was positive as gainers outnumbered losers in the ratio of 36:28, while activities in volume and value were up, after investors exchanged 622.64m shares worth N16.12bn, with volume driven by trades in Fidelity Bank, Legend Internet, UBA, GTCO and Accesscorp.
Honeywell Flour and SCOA were the best performing stocks, gaining 10% each, closing at N22.00 and N5.30per share respectively on the back of sentiment and market forces. On the flip side, Conoil and Learn Africa lost 10% and 9.98% respectively, closing at N268.30and N3.88 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, 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
