Market Update for July 14
Trading activities on the Nigerian Exchange started the week on a positive note amid a mixed session of buying interest in highly priced stocks and profit booking among the low, mid cap and blue-chip companies which, as expected, reflected in some sectors that recorded declines. That notwithstanding, the benchmark indicators again closed north on a very high traded volume, revealing the presence of institutional participation on the NGX.
The bull-run is still intact as indicated by money flow index reading 75.46 points looking up on a strong momentum as traders cash out profits. This is part and parcel of market dynamics at any time. The NGX extended to nine consecutive sessions of bull transition on a mixed sentiment, as the benchmark NGX All-Share Index hit new historic all-time highs of 126,689.54 basis points after crossing 127,000 mark, just as market capitalisation tested N80.14tr.
The mixed sentiment at the end of Monday’s trading and positive market internals, are further demonstration of investor confidence and the continued flow of funds into the equity space ahead of May consumer price index expected on Tuesday, except for the public holiday declared to mourn Nigeria’s immediate past president- Muhammadu Buhari. A few stocks hit their new 52-week highs, reflecting profit taking. This is happening in the midst of cautious trading and positive momentum with all eyes still on more corporate earnings reports inflow after early filers like Geregu Power and Living Trust Mortgage Bank released their Q2 numbers which have offered insights into what investors should expect from their industries or sectors to guide their investment decisions.
The NGX is still at a critical level of pullback or continued uptrend, depending on market forces. Already, the market is in its overbought region with strong momentum that calls for cautious trading as mentioned earlier, while companies continue to notify the exchange of the board meetings to approve their Q2 earnings reports. These are in addition to the all-important Central Bank of Nigeria (CBN) policy meeting slated for July 20 and 21.
The ongoing rally on the NGX is creating opportunities for new entry and bargain hunting, as the market expects corporate numbers to beat investors’ expectations and Monetary Policy Rate remains unchanged at the forthcoming policy meeting of the CBN.
The high volume of trades reveal institutional investor interests in the market with stock prices rallying in the midst of strong positive market internals, while investors are taking advantage of any pullback to buy into value ahead of earnings inflow. 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. Nevertheless, the expected mixed trend in Q3 may not halt the bull trend if corporate earnings meet expectation. Already, the slowdown in fixed income market rates has triggered money flowing into the market.
U.S President Donald Trump’s tariffs deadline and letters to trade partners, as events continue continue to unsettle the global economy, even as it is still unfolding 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 mixed 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 89.53.
Investor sentiment as revealed by the candlestick formation and momentum indicators shows that the ADX is very strong to read 72.15points, while RSI and Money Flow Index were up at 89.53 and 75.46 points against the previous session’s 88.96 and 74.36 points respectively. NGX at this point call for players to be watchful and trade wisely in the midst of markup phase 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 on Monday inched lower to continued its oscillation, trading at $69.21 per barrel, in the midst of new threats from US President for sanctions on buyers of Russian oil 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 trigger 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 green and it was sustained throughout the session, despite oscillating profit taking and buying interest in some stocks. This situation pushed the composite index to its intra-day high of 127,092bps from its lows of 126,151bps, before closing above its opening level at 126,690.00bps.
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 mixed sentiment as revealed by Investdata’s Sentiments Report showing 57% buy position and 43% sell volume. The total transaction volume index stood at 1.46points, as impetus behind the day’s performance was strong, as Money Flow Index was inched up to read 75.46pts, from the previous day’s 74.36pts, indicating that funds entered the market.
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Index and Market Caps
The NGX All-Share Index gained 538.50bps on Monday, closing at 126,690.00bps from 126.149.10bps, representing a 0.43% growth, while market capitalization rose by N462bn to close at N80.14tr from the previous day’s N79.68tr, representing a 0.43% value gain.
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Meanwhile, the upturn was driven by accumulation and buying interest in the shares of Dangote Cement, Okomu Oil, UBA, Stanbic IBTC, BUA Cement, PZ, Zenith Bank, Accesscorp, and Ikeja Hotel among others, which impacted positively on Year-To-Date gain which inched higher to 23.09% while Market capitalization gain stood at N27.74tr, representing 27.69% increase over its opening level for the year.
Mixed Sector Indices
Sectoral performance indexes were mixed, after the NGX Insurance and Consumer goods indexes closed 1.73% and 0.42% lower respectively, while NGX Industrial Goods led the advancers after gaining 2.27%, followed by Banking and Energy with 1.88% and 0.03% respectively.
Market breadth was positive as gainers outnumbered losers in the ratio of 44:36, while activities in volume and value were mixed, after investors exchanged 1.29 billion shares worth N32.20bn, with volume driven by trades in Accesscorp, Japaul Gold,Aiico, UBA and Jaiz Bank.
NSL Tech and Abbey Mortgage Bank were the best performing stocks, gaining 10% and 9.99% respectively, closing at N1.10 and N7.60 per share respectively on the back of sentiment and market forces. On the flip side, RT Brisco and Cutix lost 10% each, closing at N3.96 and N4.14per share, purely on profit taking and selloffs.
Market Outlook
We expect mixed sentiments on looming corporate earnings, bargain hunting and sector rotation in the midst of profit booking, as traders trade with caution, while 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
