Market Update for May 5
The new month and week started on a positive note on the Nigerian Exchange, continuing the buying momentum witnessed in the last trading weeks of the previous month on reaction to healthy Q1 numbers presented by listed companies ahead of their corporate actions dates, and price adjustment for dividend announced and payment dates. These expectedly triggered bargain hunting and portfolio repositioning in the face of mixed macroeconomic data, as purchasing manager index for the month of April slid to 54.20 points from March level of 54.30 points, which is an average of 52.81 points from 2014 till 2025. It reached its all-time high of 59.10 points in 2018 and a record low of 37.10 points in April 2020. The market is also awaiting the Q1 2025 GDP reports, even as corporate earnings had given insight into what the investing public and economist should expect from the NBS. Also, all eyes are also on April consumer price index before the upcoming policy meeting of the Central Bank of Nigeria.
The month of May historically is active on the NGX, after recording 18 times of positive close in the past 27 years and down just 9 time to defy the trade mantra of sell in May and come back in October. The benchmark NGX All-Share index closed higher to open the week on a very high traded volume and positive market internals, across the major sectors of the market. The market awaits some of the insurance companies 2024 audited and Q1 2025 financials to guide their decisions and waiting period. Also audited accounts of March year end are expected to start hitting the market any moment from this month till end of June 2025. Likes of NNFM, Honeywell, University Press, Learn Africa, Academy Press, Redstar Express and others. The expectation of dividend income for reinvestment, will further boost the inflow of funds into the equity space.
The impact of outstanding corporate earnings from different sectors across all classes of stocks including low, mid and high cap had continued to attract players to the market considering the prevailing low price to earnings of the market and individual stocks. As all eyes are still observing keenly the unfolding events globally as regard the impact of the U.S trade policy on the world economy, even as negotiations are ongoing to find a lasting solution to a problem that has already triggered a shift in global trade order. This problem is, however, a plus for some emerging economies like Africa, among others provided the right steps are taken.
The NGX index has just broken out another strong resistance level of 106,124 on a high traded volume to signal a markup phase that needs confirmation in the face of buying sentiment and expectation of more earnings reports. As investors and traders continue to navigate and watch the trend to take advantage of likely uptrend on the strength of companies’ performance. Players should target fundamentally sound stocks as they position in value and defensive stocks with strong earnings power and positive technicals in the face of sector rotation persisting. The market is still at its recovery mood, 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 are up, revealing that funds entering the market and strength that presents opportunities to buy low and sell high in the midst ongoing volatility and buying sentiment. As the index closed higher on buying sentiment and position taking, thereby creating the perfect setup for high probability of continuation to catch dividend season and Q1 numbers to reposition at the right price. Just as, the index trades above T-line and the two moving averages of 50-EMA and 50-SMA, that signaled recovery and 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 down to read 17.63 points, while RSI and Money Flow Index were up at 62.24 and 70.68points against the previous session’s 56.85 and 70.02 points respectively. At this state of the market, players should watch the trend and trade wisely in the midst of funds entering into the market on a 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 Trump tariffs policy easing.
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 pulled back significantly to continue its oscillation, as it trades at $60.12per barrel, in the face unclear direction of US-China trade talks and OPEC moves to hike production in the coming months. Even as recession narrative remain a concern, as US-Russia peace talk and ceasefire in Ukraine remains on shaky grounds. The trade tariffs negotiations and white house rumor 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 upside and was sustained throughout the session, despite oscillating on profit taking in banking and buying interest in others sectors. This pushed the NGX’s index to intra-day high of 106,707.60bps from its lows of 106,010.50bps, before closing above its opening level at 106,698.50bps.
Market technicals were positive and strong with higher volume when compared to previous session in the midst of breadth favoring the bulls on a buying sentiment as revealed by Investdata’s Sentiments Report showing 99% buy position and 1% sell volume. The total transaction volume index stood at 1.15points, just as momentum behind the day’s performance was relatively strong as Money Flow Index inched higher to read 70.68pts, from the previous day’s 70.02pts, indicating that funds entered the market.
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Index and Market Caps
The composite index NGXASI, at the end of Monday trading gained 655.56 basis points, closing at 106,698.50bps from 106,042.12bps, representing a 0.62% growth, while market capitalization rose by N412.26bn, at N67.06tr from the previous day’s N66.68tr, representing a 0.62% appreciation in value.
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The upturn was driven by position taking in Cadbury, MTNN, Presco, Dangote Sugar, Beta Glass, Aradel and Legend Internet, among others. This impacted positively on Year-To-Date gain which inched up to 3.66%, while Market capitalization gain stood at N6.67tr, representing 6.87% increase over its opening level for the year.
Bullish Sector Indices
Sectoral performance indexes rose, except for the NGX Banking index that closed lower by 1.63%, while the NGX Consumer goods index led the advancers after gaining 2.90% followed by Insurance, Energy and Industrial goods with 2.69%, 2.58% and 0.07% respectively.
Market breadth was positive as gainers outnumbered losers in the ratio of 36:19, while activities in volume and value were up, after investors exchanged 569.93m shares worth N18.93bn, with volume driven by trades in First Holdco, GTCO, Accesscorp, Japaul Gold and Chams.
Beta Glass and The Intiative Plc were the best performing stocks, gaining 9.97% and 9.90%, respectively closing at N120.75 and N5.44 per share respectively on the back of sentiment and impressive. On the flip side, ETI and Meyer lost 9.62% and 6.70%, closing at N23.50 and N8.35 per share, purely on profit taking.
Market Outlook
We expect mixed sentiments to continue on positive reaction to Q1 numbers and profit taking as investors buy into value in expectation of more Q1 earnings reports in the midst of profit taking and 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
