Mixed Sentiments Continues On Nigerian Bourse, As Traders Digest Impact Of Declining TB Rates, Expect More Earnings Reports
Market Update for July 23
The bullish momentum on the Nigerian Exchange continued at the midweek on a mixed session as the share prices of more manufacturing companies hit new 52-week highs, alongside some services providers. This weighed positively on the benchmark NGX All-Share index which closed marginally high on a low traded volume and negative market breadth that the signal wait-and-see attitude of market players. More impressive corporate earnings came from the real sector, revealing the impact of relative stability in the Naira, helping companies to plan well and manage cost especially those still importing their major raw materials for production.
The outcome of midweek’s Treasure Bills’ Primary Market Auction rates declined across all tenors, signaling a continued flow of funds into the equity space, even as corporate earnings are likely to beat market expectations, supporting the ongoing sector rotation and portfolio rebalancing. The NGX remains in the midst of seeming uptrend and distribution phase that signals that correction is underway, depending on the state of the expected numbers and market sentiment to these numbers. This signals cautious trading and investing at this reflective point of the market, as the index inched up to a new high of 132,557 at its overbought region with more stocks and sectors hitting their new 52-week highs, just as momentum indicators like money flow and RSI reading 100 and 93.70 points respectively.
The NGX seems to be losing strength, even with the buying sentiment in large cap stocks and others, as more corporate numbers are expected to the market next week. The Q2 numbers from Dangote Sugar presented to the market after the trading session indicates strong recovery and turnaround that will usher it into the path to profitability in coming quarters and years. The company’s top line jumped significantly, revealing an expansion in market share and a huge drop in lose position. This is a pointer to where the company is headed in the current financial year. Also, it is pointer to what players should expect from others in that sector or industry.
The NGX is still at a critical level of pulling back or continued uptrend, as the market is already at its overbought zone with strong momentum that calls for cautious trading as mentioned earlier, while more companies continue to notify the exchange of the board meetings to approve their Q2 earnings reports. Pullbacks in stocks are creating opportunities for new entry and bargain hunting, as the market expects corporate numbers to beat investor expectations. There is also the impact of market confidence around the government’s economic reforms, while foreign investors are also seeing value in the NGX, a situation that has supported inflow of funds into the market and the economy at large.
Trump big statements and continue trade deals agreement ahead of deadline of August 1, 2025 for effective take off with trade partners continues to unsettle the global economy, even in the midst of geopolitical tensions arising from the Middle East ceasefire. This has impacted mixed sentiment in 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 sentiment, 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 93.70.
Market pulse as revealed by the candlestick formation and momentum indicators shows that the ADX is very strong to read 79.87points, while RSI and Money Flow Index were up at 93.70 and 100 points against the previous session’s 93.64 and 100 points respectively. NGX at this point call for players to be watchful and trade wisely in the midst of markup, distribution and mixed 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 at midweek slide lower and continued its oscillation, trading at $68.00 per barrel, in the midst of trade tensions cloud oil outlook and geopolitical uncertainty. Despite global supply headwinds. Also, the ceasefire in Mideast for peace talks that seem to be shaking, and that of Ukraine-Russia peace talk. Even as OPEC production hike misguide the market. The ongoing developments will trigger inflation and rate hikes if peace is achieved. All eyes are on emanating quarterly earnings reports. 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.
Midweek’s trading opened slightly in the upside and was sustained throughout the session, despite oscillating on profit taking and buying interest in all class of stocks. This situation pushed the composite index to its intra-day high of 132,640bps from its lows of 132,296bps, before closing above its opening level at 132,557.43bps.
Market technicals were weak and mixed with lower volume when compared to previous session in the midst of breadth that favors the bears on a buying sentiment as revealed by Investdata’s Sentiments Report showing 76% buy position and 24% sell volume. The total transaction volume index stood at 0.74points, as impetus behind the day’s performance was strong, as Money Flow Index was flat to read 100pts, from the previous day’s 100pts, indicating that funds entered the market.
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Index and Market Caps
The NGX All-Share Index at the close of trading inched up 89.92bps, closing at 132,557.43bps from 132,451.73bps, representing a 0.08% up, while market capitalization rose by N66.9bn to close at N83.86tr from the previous day’s N83.79tr, representing a 0.08% value gain.
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The marginal upturn was driven by accumulation and buying interest in the shares of Dangote Sugar, Nestle, Nahco, Accesscorp, and Ikeja Hotel among others, which impacted positively on Year-To-Date gain which inched higher to 28.79% while Market capitalization gain stood at N34.36tr, representing 33.78% 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 lower with 0.62%, while the NGX Banking index led the advancers after gaining 0.44%, followed by Consumer goods, Energy and Insurance with 0.30%, 0.21% and 0.13% respectively. Market breadth was positive as gainers outnumbered losers in the ratio of 36:34, while activities in volume and value were down, after investors exchanged 681.24 million shares worth N17.02bn, with volume driven by trades in Accesscorp, EllahLakes, Japual Gold, Royal Exchange and Universal Insurance.
Academy Press and TIP were the best performing stocks, gaining 10% and 9.98% respectively, closing at N7.70 and N13.34 per share respectively on the back of sentiment and market forces. On the flip side, Austin Laz and Tripple Gee lost 10% and 9.95% respectively, closing at N2.34 and N3.89per share, purely on profit taking and selloffs.
Market Outlook
We expect mixed sentiments to continue, as players digest Declining TB rates, in expectation of more corporate earnings and sector rotation in the midst of profit booking and cautious trading, while investors analyze earnings release so far 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
