• Gains 1.09%, Despite Higher Fixed Income Market Yields

Mixed trend and sentiments were obvious in 22 trading sessions the Nigerian Exchange opened for trading in the month of May when the benchmark All-Share Index closed positive and positive in 11 trading sessions each. This short-lived the market correction witnessed the previous month, and lifted year-to-date positive position to 32.80%.

The month of May recorded a 1.09% gain on the back of several factors including the prevailing low price attraction of listed companies that paid dividends for the 2023 financial year and interest shown by smart money. The gain was also despite the fact that market the continued to mirror economic realities as revealed by the weak economic fundamentals and data released so far.

Meanwhile, the composite NGXASI for the month gained 1,044.93 points, closing at 99,300.56 from its 98.225.63bps opening level on a renewed thirst for dividend and capital gain that impacted on stock prices. Within the period under review, a few stocks hit new 52-week highs.

NGX ASI Monthly Chart (Opening)

May has oftentimes been renowned as a month of negative returns as many stock are marked down after the payment of dividends. Despite the saying “sell down in may,“and the severe hike in interest rates, the month of May has recorded positive return  since 2022.

The NGXASI and market capitalization surged 1%, a marginal improvement on the  6% loss in April, trading above the 99,000 psychological lines, and N56.17tr capitalization while leaving the year-to-date at 32.8%.

The month also recorded a turnover volume of 9.96bn shares valued at N19.8 billion in 197,056 deals. This positive market breadth was buoyed majorly by banking, consumer goods, Oil & gas sector. The banking sectors has contributed so well to the ASI as a result of their robust financial performance, with positive topline and bottom line from big banks like GTCO, FBN Holdings, Sterling Bank, Access Holdings, Zenith Bank, UBA, Fidelity Bank which boosted investor confidence and trust in the sector. The banking index gained 2.97%, bringing the Banking index to 797.37bps.

The Consumer Goods sectors contributed to the positive breadth during the period, with 1.19% gain bolstered by the shares of Dangote Sugar, Nascon and International Breweries. The Oil and gas sector also rose by 2.1%, boosted majorly by the shares of Seplat Energy, in what may not be unrelated to news that the Federal Government finally approved plans by the energy giant to acquire the assets of Mobil Producing Nigeria Unlimited for a princely $1.28bn with the signing of a settlement agreement.

Readings from technicals suggests that the market is at the over bought region as confirmed by RSI reading of 79.4, following which we advice sound investors to go for sectoral shopping as a guaranty of positive real return on the long run

NGX BANKING INDEX Monthly Chart

The Banking index has declined by 0ver 26.6% from its all time high of 1099.45 points recorded on January 16, 2024. This decline was bolstered by the severe interest rake hike which made a lot of investors seek alternative investment outlets for higher yield not minding that it still offers a negative real return on the long run. The banking sector is projected to do well, because of its long history of consistently rewarding shareholders. Companies that focus on their stock price will eventually lose their shareholders to other companies, while those who rewards shareholders will eventually boost their stock price because liquidity drives markets all over the world. Importantly too, banks have released fantastic Q1 results, for which their share prices are projected to rise even higher, because prices feed on earning. We also note the impending banking sector recapitalization which is at the corner.

During the week that ended the month of May, Access Holdings major stakeholder showed a big confidence in their stock by mopping up over N1.0bn worth of shares. When stakeholders invest in their shares, it is a signal of a bumper harvest around the corner. Technical indicators show that the market will perform well to an extent in the month of June due to liquidity which is a huge market driver as shown by money flow readings of 76.66. Added to this is the MACD trading above the signal line with relative strength reads of 60.269, all signalling uptrend. Wise investors should get their funds ready by taking position in this robust sector.

NGX CONSUMER GOODS INDEX Monthly Chart

This large sector has declined from its all time high by 15.11%. The index was majorly dragged down by shares of Nascon and Dangote Sugar, due to the recent pause in their merger plans with sister companies, which brought about panic selling of its shares. However, Information flying about Customs Street is that the merger plan is still around the corner and will happen any time from now. The merger will bring about significant boost in its share price. There is hardly any home where products of consumer goods makers are not being used, which is why it is a good sector to pitch your tent for a profitable harvest. Moreso, the Q1 recent results of companies in this sector have shown fantastic top lines and bottom lines. For investors willing to partake in this rally, pitch your tent early enough for maximum reward. The sector has a significant amount of funds as revealed by its Money Flow reading of 75.93. MACD is currently above the signal line with a relative strength index reading of 61.38

NGX INSURANCE INDEX Monthly Chart

This sector has declined by over 20% from its all-time high. The share price of NEM insurance, a leader in this sector has performed very well in the month of May. Last week it released a very fantastic Q1 result; just as peers- Aiico and AXA Mnsard also performed excellently well. There are great opportunities in this sector and it should be an avenue to make a good return in the month of June. Readings from money flow (55.23) shows a lot of funds are committed to this stock with MACD currently above the signal line. RSI reading of 47.3 shows that a lot of opportunities lies in these stocks.

NGX INDUSTRIAL GOODS INDEX Monthly Chart

NGX OIL/GAS INDEX Monthly Chart

MANSARD Monthly Chart

Transcorp Monthly Chart