Market Update for May 8
The buying momentum on the Nigerian Exchange that supported the bull transition continued on Thursday, as the benchmark NGX All-Share index closed higher, breaking out the 109,000 psychological line once again, heading to the all-time high of 109,850.80 basis points level in the midst of position taking in low, medium and high cap stocks that had supported the ongoing recovery and uptrend. Also, the NGX index action is forming a double top chart pattern that signals continuation of trend or reversal which needs confirmation as trading opens on Friday. So far, the market has rallied back-to-back for five successive sessions on a buying pressure and positive market breadth.
There is a renewed buying sentiment in highly priced equities in the face of impressive corporate earnings that triggered inflow of funds into these stocks, as investor confidence was boosted by the inflow of better-than-expected numbers, who’s effect overshadowed the prevailing global uncertainties arising from the lingering trade war and geopolitical tensions in some countries and nations today. The stocks with earnings momentum have been the attraction of market players especially investors, while traders continued to trade the momentum, price action and market structure to time their trades for entry and exits. Even as sector rotation and portfolio rebalancing will continue on the NGX.
The month of May have been positive, recording 3.24% gains in the five trading sessions, gradually aligning with NGX historical data and trend of May defying the trade mantra of sell in May and comeback in October. This trend is likely to repeat itself as more audited accounts are expected especially the March financial year-end and payment of dividend declared to support funds flowing into the market as investors reinvest their dividends.
Sector rotation and portfolio rebalancing have been evident in positioning pattern so far in the market which had reflected across all classes of stocks including low, mid and high cap revealing a change of waves and impetus that continued to attract players to the market. Even 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 recovery and rally has been supported with a very high traded volume, as players needs to confirm continuation after index had tested 109,233.58 in the face of buying sentiment and expected profit taking. Traders should continue to navigate and watch the trend to take advantage of likely pullbacks to buy more on the strength of companies’ performance and value, 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 are up, indicating that funds are 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 revealed recovery and strength in the midst of changing market fundamentals and technicals on the NGX and the economy.
Investor sentiment as revealed by candlestick formation and momentum indicators, shows that the ADX is looking up to read 21.62 points, while RSI and Money Flow Index were up at 75.36 and 83.34points against the previous session’s 74.46 and 77.47 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 Thursday inched up to continue its oscillation, as it trades at $63 per barrel, in the face US-UK trade deal 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, Thursday’s trading started in the green and it was sustained for the rest of the session, on buying interest across some major sectors that pushed the NGX’s index to intra-day high of 109,233.60bps from its lows of 108,799.60bps, before closing above its opening level at 109,232.00bps.
Market technicals were positive and strong with lower volume when compared to previous session in the midst of breadth favoring the bulls on a buying pressure as revealed by Investdata’s Sentiments Report showing 100% buy position and 0% sell volume. The total transaction volume index stood at 1.15points, just as impetus behind the day’s performance was strong as Money Flow Index inched higher to read 83.34pts, from the previous day’s 77.47pts, indicating that funds entered the market.
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Index and Market Caps
At the end of trading, the composite NGXASI gained 382.13 basis points, closing at 109,232.00bps from 108,849.83bps, representing a 0.35% growth, while market capitalization rose by N240.15 billion, at N68.65tr from the previous day’s N68.41tr, representing a 0.35% value gain.
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Thursday’s upturn was driven by position taking in Dangote Cement, Transcorp Hotel, Chellaram, Stanbic IBTC, Ecobank Transnational, Accesscorp, Zenith Bank, GTCO and Wema Bank, among others. This impacted positively on Year-To-Date gain which inched up to 6.13%, while Market capitalization gain stood at N8.77tr, representing 9.12% increase over its opening level for the year.
Bullish Sector Indices
All sectoral performance indexes inched up save for the NGX Consumer Goods index that closed 1.34% lower, while the NGX Banking index led the advancers after gaining 1.02% followed by Industrial goods, Insurance and Energy with 0.98%, 0.33% and 0.07% respectively.
Market breadth was positive as gainers outnumbered losers in the ratio of 50:15, while transactions in volume and value were down, after investors exchanged 554.07m shares worth N14.35bn, with volume driven by trades in Fidelity Bank, Accesscorp Zenith Bank and NB.
Chellaram and Beta Glass were the best performing stocks, gaining 10% each, closing at N9.46 and N160.65 per share respectively on the back of sentiment and impressive numbers. On the flip side, Abbey Mortgage Bank and Livestock Feeds lost 10% and 9.77%, closing at N7.47 and N7.85per share, purely on profit taking.
Market Outlook
We expect the mixed sentiments on continue bargain hunting, sector rotation and profit taking, as investors buy into value in expectation of more corporate 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
