Market Update for August 11
Trading activities on the Nigerian Exchange started the week on a positive note, amid the marginal gain that reflects profit taking as market players continue interpreting the inflow of corporate earnings and repositioning of their portfolios. This is expected ahead of the July consumer price index report that will give direction in the aftermath of the decision by the Central Bank’s monetary policy committee to leave its rate unchanged at its recent meeting.
Meanwhile, the selling sentiment witnessed during the session supports the ongoing pullback that is creating opportunities for traders and investors to take new positioning after the long bull transition that left the market at its overbought region. The benchmark NGX All-Share index closed slightly higher on a very high traded volume in the face of positive market breadth and profit taking in some sectors on the exchange.
The seeming rebound on Monday which halted previous session’s loss and pullback on increasing buying interest in insurance stocks and others that pushed the index marginally up, sustaining the positive upbeat. Some highly priced stocks and others appreciated, hitting new 52-week highs across some major sectors of the market, which has revealed a strong momentum in the market as money flow index inched up to 86.49 points, as a result of renewed investor interests and confidence while accumulating low, mid and high stocks during the session.
The top chart pattern formation in the midst of consolidation and marginal decline in volume traded calls for caution as there is the possibility of a reversal, just as there is a 50-50 chance of the continuation of trend. This possibility needs a confirmation as trading opens on Tuesday with expectation of positioning and profit taking in the market ahead of interim dividends markdown.
The market is still at a critical level of either a reversal, or continuation of uptrend, with strong momentum as all eyes are on macroeconomic data for insight. Any pullback at this point will create opportunities for new entry and bargain hunting into value stocks and defensive companies and sectors, as the market expects more companies to beat investor expectations. These will further boost market confidence, as government’s economic reforms impact positively on the economy, while foreign investors are also seeing value in the NGX, a situation that has attracted inflow of funds into the market and the economy at large.
The optimism of US -China tariff truce extension for the two countries to reach agreement on trade tariff, coupled with the peace talk again to end Middle East conflicts and the war in Ukraine to restore peace that will drive global economic recovery and stability. August 12, 2025 deadline for China and US as market awaits the next move. The mixed sentiment in major stock markets of the world has been as a result Trump leadership pattern and policy statements here and there. 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 up on a selling sentiment, thereby creating the perfect setup for high probability of continuation to catch good entering position 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 92.70.
Investors sentiment as revealed by the candlestick formation and momentum indicators shows that the ADX is very strong to read 90.70points, while RSI and Money Flow Index were up at 92.70 and 86.49points against the previous session’s 92.60 and 85.22 points respectively. NGX at this point call for players to be watchful and trade wisely in the midst of distribution 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 up to continued its oscillation, trading at $64.11per barrel, in the midst of Trump deadline to Russia to end war and optimism on trade deals. Even in the face of 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.
Monday’s trading opened in the green and it was sustained for the rest of the session on buying interests in some of major sectors, low, mid and large cap companies. This situation pushed the composite All-Share index to its intra-day high of 146,389.80 basis points from its lows of 145,695.70bps, before closing above its opening level at 145,948.47bps.
Market technicals were positive and mixed with lower volume when compared to previous session in the midst of breadth that favors the bulls on a selling sentiment as revealed by Investdata’s Sentiments Report showing 36% buy position and 64% sell volume. The total transaction volume index stood at 1.91points, as impetus behind the day’s performance was strong, as Money Flow Index was up to read 86.49pts, from the previous day’s 85.22pts, indicating that funds entered the market.
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Index and Market Caps
The composite NGX All-Share Index, at the end of Monday trading gained 192.37bps, closed at 145,948.47bps from 145,756.10bps, representing a 0.13% up, while market capitalization rose by a further N43 billion to close at N92.33tr from the previous day’s N92.21tr, representing a 0.13% value gain.
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Meanwhile, this upturn was driven by demand and accumulation in the shares of BUA Food, Stanbic IBTC, Mansard, NEM and TIP among others, which impacted positively on Year-To-Date gain which inched higher to 41.80% while Market capitalization gain stood at N46.12tr, representing 47.12% increase over its opening level for the year.
Mixed Sector Indices
Sectoral performance indexes were mixed, after the NGX Insurance and Banking closed 9.74% and 0.44% higher respectively, while the NGX Industrial Goods index led the decliners after losing 1.47%, followed by Consumer and Energy with 0.98% and 0.56% respectively.
Market breadth was positive as gainers outnumbered losers in the ratio of 41:36, while activities in volume and value were down, after investors exchanged 2.11bn shares worth N19.39bn, with volume driven by trades in Linkage Assurance, Universal Insurance, Aiico, SterlingNG and Veritas Kapital.
Aiico and Stanbic IBTC were the best performing stocks, gaining 10% each, closing at N3.85 and N111.10 per share respectively on the back of sentiment and market forces. On the flip side, Abbey Mortgage Bank and ABC Transport lost 10% each, closing at N5.67 and N4.50per share, purely on selloffs and profit booking.
Market Outlook
We expect mixed sentiments to continue on profit taking and sector rotation ahead of July CPI. As players digest the companies numbers in the midst bargain hunting and cautious trading, while investors buy into value in the midst of portfolio reshuffling, even as few quarterly reports are expected to hit the market.
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
