Market Update for July 17
The bullish ascendance continued on the Nigerian Exchange continued on Thursday, following increased buying interest in highly capitalized stocks among others, a situation that weighed positively on the benchmark NGX All-Share index as it closed higher on a high traded volume in the midst of negative market breadth and buying sentiment. The market and some major sectoral indexes made yet another new all-time high boosted by gains recorded in Dangote Cement, BUA Cement and host of others which broadened the NGX momentum lifting over the psychological lines of 129,000 and 130,000 to test 130.375.90 basis points. The composite index however settled at 130,283bps on negative market internals that indicates that a weakening market and pullback is underway, due to the ongoing profit taking ahead of the half-year earnings season.
That notwithstanding, the high traded volume revealed the presence of institutional players on the NGX, as money flow index continued to look up and read 82.82 points in the midst of expanding numbers of decliners and few stocks large cap driving the strong momentum on the exchange, even as traders cash out profits while the NGX index extended its bull transition for the eleventh successive sessions back to back on a mixed sentiment.
There was some profit taking in the midst of up market on Thursday ahead of the Central Bank of Nigeria’s policy meeting next week, as investors and traders continue to digest the consumer price index data for the month of May revealing a further slowdown in inflation at 22.22%, with the likely implication that MPC members could vote to cut the benchmark Monetary Policy Rate at next week’s meeting. They is also the likelihood that they could vote for a hold, given that food and core inflation rates inched higher month-to-month during the period. There are also the impact of the unsettling insecurity situation, as well as continued oscillation in the pump price of petroleum products which are not helped matters despite the rebasing of inflation dynamics.
All eyes are still on the NBS for the new GDP data, just as no stock made a new 52 week high during Thursday’s trading to reflect profit booking and selloffs in some stocks and sectors. 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 investor expectations and Monetary Policy Rate remains unchanged at the forthcoming policy meeting of the CBN. 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 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 92.41.
Market pulse as revealed by the candlestick formation and momentum indicators shows that the ADX is very strong to read 74.95points, while RSI and Money Flow Index were up at 92.41 and 82.83 points against the previous session’s 91.51 and 76.22 points respectively. NGX at this point call for players to be watchful and trade wisely in the midst of markup phase and mixed momentum 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 Thursday inched up to continued its oscillation, trading at $69.21 per barrel, in the midst of geopolitical risk, inventory worries and threats from US President for sanctions on buyers of Russian oil. Even with concerns over tariffs deadline and all. 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 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.
Meanwhile, Thursday’s trading started in the upside and was sustained for the rest of the session, despite oscillating profit taking and buying interest in some stocks. This situation pushed the composite index to its intra-day high of 130,375.90bps from its lows of 128.961.30bps, before closing above its opening level at 130,282.70bps.
Market technicals were strong and mixed with lower volume when compared to previous session in the midst of breadth that favors the bulls on a buying sentiment as revealed by Investdata’s Sentiments Report showing 93% buy position and 7% sell volume. The total transaction volume index stood at 1.36points, as impetus behind the day’s performance was strong, as Money Flow Index was inched up to read 82.83pts, from the previous day’s 76.22pts, indicating that funds entered the market.
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Index and Market Caps
At the end of trading, the composite index NGXASI gained 1,315.71bps, closing at 130,282.70bps from 128,967.10bps, representing a 1.02% growth, while market capitalization rose by N1.0bn to close at N84.14tr from the previous day’s N82.78tr, representing a 1.02% appreciation in value.
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The session upturn was driven by accumulation and buying interest in the shares of Dangote Cement, BUA Cement, Nascon, Stanbic IBTC, Unilever, PZ, FirstHoldco, Wapco, and Dangote Sugar among others, which impacted positively on Year-To-Date gain which inched higher to 26.58% while Market capitalization gain stood at N30.14tr, representing 30.12% increase over its opening level for the year.
Mixed Sector Indices
Sectoral performance indexes were mixed, after the NGX Industrial and Consumer goods indexes closed 9.08% and 0.54% higher respectively, while the NGX Banking led the decliners after losing 2.34%, followed by Insurance and Energy with 0.89% and 0.61% respectively. Market breadth was negative as losers outnumbered gainers in the ratio of 44:29, while activities in volume and value were down, after investors exchanged 1.19 billion shares worth N42.76bn, with volume driven by trades in Accesscorp, Firstholdco, Zenith Bank, NB and Aiico.
BUA Cement and Dangote Cement were the best performing stocks, gaining 10% and 9.99% respectively, closing at N112.20 and N473.30 per share respectively on the back of sentiment and market forces. On the flip side, Berger Paints and Hmcall lost 10% each, closing at N33.75 and N4.68per share, purely on profit taking and selloffs.
Market Outlook
We expect mixed sentiments on the looming MPC meeting, corporate earnings, bargain hunting and sector rotation in the midst of profit booking, amid cautious trade, 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
