Market Update for May 19
Profit taking resurfaced, resulting in a mixed session as trading commenced in the new week Monday on the Nigerian Exchange amid buying interests across some major sectors of the market, as well as profit booking in some highly priced stocks, and blue-chip companies. This weighed marginally on the composite NGX All-Share index as it closed slightly lower on a low traded volume and positive market breadth ahead of CBN policy meeting outcome.
The mixed market sentiment and candlestick formation at the end of the session reveals a level of indecision among market players, and at same time a double top reversal chart pattern that supports pullback that needs confirmation as trading opens on Tuesday. Alread, all eyes are on ongoing meeting of the Monetary Policy Committee outcome, even as many analysts and economist expect another hold, or a 25 basic points cut if members deem it necessary. The index’s action during session tested a new all-high of 109,898.80 before closing lower on sell pressure in some stocks like MTNN and other banking stocks. This halted the four straight trading sessions of bull transition.
Strong buying sentiment and momentum are still evident in the market, despite the profit taking and downgrade of the U.S credit rating, putting pressure on global stock markets as witnessed at the end of Monday in their markets. This is coupled with the mixed economic data from the US and China, despite the expected lower tariffs after the 90-day negotiation period. Investors in any market should at this point target stocks with strong earnings momentum that will impact price in the short to long run. Traders should continue to trade momentum, price action and market structure while timing their trades for entry and exit amid continuing portfolio rebalancing on the exchange.
Despite the slide in the NGX, funds continue to flow into mid and highly capitalized stocks, market players should continue to navigate and watch the trend to take advantage of the uptrend and buy into value on the strength of companies’ performance and prospect, by targeting fundamentally sound companies and defensive stocks with strong earnings power and positive technicals in the face of sector rotation persisting. The market is still at its recovery 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 to indicates funds entering the market on buying momentum that presents opportunities to buy low and sell high in the midst ongoing volatility and recovery. As the index closed higher on a positive momentum and position taking, thereby creating the perfect setup for high probability of continuation to catch Q1 numbers to reposition at the right price. Just as, the index still trades above T-line and the two moving averages of 50-EMA and 50-SMA, that revealed strength in the midst of changing market fundamentals and technicals on the NGX and the economy.
Market metrics as revealed by candlestick formation and momentum indicators, shows that the ADX is looking up to read 27.44 points, while RSI and Money Flow Index were mixed at 72.84 and 83.01 points against the previous session’s 73.00 and 83.01 points respectively. At this state of the market, players should watch the trend and trade wisely in the midst of distribution 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 position 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 Monday dropped to continue its oscillation, as it trades at $64.64 per barrel, in the midst of US credit rating downgraded and mixed macroeconomic data emanating from US and China. Even as OPEC production drop for month in the face of planning to hike output. Even as US-Russia peace talk and ceasefire in Ukraine continued as Russia and Ukraine president’s plan to meet on Thursday. The trade tariffs negotiations and white house talks flying to drive sentiment and global 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, Monday’s trading opened in the downside and was sustained throughout the session, despite oscillating on buying interest in consumer goods stocks and others, while profit taking in other. This situation pushed the NGX’s index to intra-day low of 109,540.50bps from its highs of 109,898.80bps, before closing marginally below its opening level at 109,697.80bps.
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 44% buy position and 56% sell volume. The total transaction volume index stood at 1.03points, just as impetus behind the day’s performance was strong, as Money Flow Index was flat to read 83.01pts, from the previous day’s 83.01pts, indicating that funds entered the market.
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Index and Market Caps
The NGX All-Share Index lost a marginal 12.31 basis points, closing at 109,697.83bps from 109,710.72bps, representing a 0.01% drop, while market capitalization fell slightly by N7.88bn, at N68.90tr from the previous day’s N68.95tr, representing a 0.01% value loss.
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Monday’s downturn was driven by profit booking in MTNN, Accesscorp, Wema Bank, Transcorp Hotel, ABC Transport, FTNCoca and Fidelity Bank, among others. This impacted mildly on Year-To-Date gain which inched lower to 6.58%, while Market capitalization gain stood at N9.12tr, representing 9.65% increase over its opening level for the year.
Bullish Sector Indices
Sectoral performance indexes were up, save for the NGX Banking index that slipped by 0.74%, while the NGX Consumer Goods index led the advancers after gaining 1.55% followed by Insurance, Energy and Industrial goods with 0.56%, 0.19% and 0.17% respectively.
Market breadth was positive as gainers outnumbered losers in the ratio of 46:23, while transactions in volume and value were mixed, after investors exchanged 729.87m shares worth N13.88bn, with volume driven by trades in Accesscorp,Fidelity Bank, GTCO, Cutix and UBA.
Ikeja Hotel and Tantalizer were the best performing stocks, gaining 10% each, closing at N15.40 and N2.53 per share respectively on the back of sentiment and market forces. On the flip side, The Initiate Plc and ABC Transport lost 10% and 9.85%, closing at N6.12 and N2.66per share, purely on profit taking.
Market Outlook
We expect mixed sentiments on expected MPC meeting outcome and profit taking, as investors take advantage of pullback to buy into value in expectation of more corporate earnings reports 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
