Market Roundup for April

Trading in the fourth and first month of the year and 2025Q2 respectively ended Wednesday on the Nigerian Exchange (NGX) with the composite All-Share index recording a slight gain, halting previous month’s bearish position on the back of the better-than-expected Q1 corporate earnings and amid the global economic uncertainties driven by US trade policy. This was made worse by the lingering geopolitical tensions in some countries of the world.

Already, the tariffs and counter-tariffs imposed are resulting in selloffs in the major markets, thereby creating buy opportunities for traders and investors in these domain,helped by healthy company scorecards and mixed macroeconomic data pointing to continued volatility. These are expected to create wealth for players that plan their trades and trade their plans, especially amid the ongoing trade negotiations and shift in trade policies now creating new opportunities for nations and companies.

The NGX’s index, following the pullbacks and market correction has broken the 104,000 basis points psychological line from its peak of 109,850.80bps in February as it rebounded in the midst of the national economic recovery while crude oil is selling below the 2025 budget benchmark price of $75 per barrel.  This retracement on the NGX continues to confound many analysts and market watchers, judging by the economic realities as shown in the latest reports of the World Bank and International Monetary Fund (IMF) that Nigeria’s economy growth will slow down to 3% this year.

The benchmark index only managed to recover 0.13%, closing the month of April marginally higher on a low traded volume, while forming a reversal chart pattern called a bullish hammer candlestick that signal an uptrend in the new month which needs confirmation.

The cup and handle monthly chart pattern formation at the end of April, signals the possibility of an uptrend in May with the inflow of smart money into the market after institutional players are done with digesting these corporate earnings, armed with a clear direction of interest rate, ahead of the Central Bank of Nigeria (CBN) Monetary Policy Committee meeting slated to May 19-20.

Also, dividend payment and markdown for December 31, 2024 accounts continue in this month, while investors move their gaze to March year-end audited results, as well as late Q1 2025 earnings reports which would hit the market this in new month of May. These expectations are likely to shape the market in the coming days and weeks, even as bargain hunting activities among traders and investors would increase with buying interests at a time the prices of many equities are trading at a discount to their true value. This is irrespective of the challenging global economic situation that is sliding into recession, while macro-economic indicators in the domestic economy are recovering.

However, Investdata believes that the NGX’s slight rebound in April is beyond investors’ hunger for undervalued stocks, or even the earnings expectations. We believe, instead, that the rebound points to a new opportunity for the government and its economic managers to rethink their fiscal and monetary policies to reposition Nigeria economy for sustainable growth and development. This is the time for the monetary and the fiscal authorities to partner and sustain this relative stability in foreign exchange market by tackling insecurity in the land necessary to allow framers return to their farm, a situation that would checkmate the rising prices of food items in the market. Also important, is the need to stabilize energy and power tariff and help boost industrialization.

Meanwhile, in the 19-trading sessions of April, the index recorded 11 trading days of down market and eight sessions of positive market during the period, even as the index oscillated in the midst of selloffs and position taking on stronger than expected companies’ numbers that revealed value.

Specifically, the composite NGXASI inched up by 140.21 basis points in the month of April to close at 105,800.85bp, after touching high of 106,466.90 and a low of 103,591.10 from an opening figure of 105,660.64bp, representing 0.13% up.

The buying volume of total transactions for the month was 77%, while selling position was 23%, halting previous month’ down market as volume index for the period was 0.83. Market capitalization for the month rose by N239bn to close at N66.496tr, from an opening value of N66,257tr, representing 0.36% value gain, higher than the index due to listing of some bank’s primary activities. During the month, the entire two billion ordinary shares in issue of Legend Internet Plc were listed on the Mainboard of the NGX at N5.64 per share by way of introduction.

Also, the market witnessed buying sentiments and reactions to the 2024 audited results and unaudited 2025Q1 scorecards of some listed companies. Transaction volume during the month dropped by 25%, as investors traded 8.28bn shares, compared to the previous 11.04bn units in the previous month.

The NGXASI’s year-to-date closed lower at 2.79%, just as market capitalisation stood at N5.89 trillion, representing 5.42% gain YTD from the opening value.

Market breadth for April was slightly positive as advancers outpaced decliners in the ratio of 52:51, thereby short-living the bear transition, despite the slow recovery of the economy, buying sentiment, and the strong numbers of quoted companies with December year-end that had released their 2024 financials and first-quarter earnings reports. The earnings reports were impressive and higher than market expectations, especially from the consumer goods, oil, agri-business and services sectors. This helped manufacturing companies and others to emerge among the best performing in the month April.

The sectoral performance chart below shows that consumer goods propelled the market the most in the period under review, gaining 10.42%, compared to the 0.12% recorded by the benchmark NGX All-Share Index. It was followed by NGX Pension which rose by 3.41%, reflecting the confidence investors reposed in such stocks, besides acknowledging their recovery from loss positions, in addition to the impact of recovery in the price of telecommunication giant, MTN Nigeria. This was followed by the NGX Mainboard index, which was up by 1.85% for the month, arising from their low-price attractions, after they had pulled back from February peak. There was also the impact of the low Price-To-Earnings attraction in the market and sectors, which also helped indexes like NGX Premium and NGX 30 to close in green. On the flip side, the NGX Oil/Gas led with 4.23%; followed by NGX Industrial Goods, Insurance, Banking and Premium with 3.76%, 3.52%, 1.52% and 1.35% respectively.

Best Performing Stocks for April

The month’s best performer was Abbey Mortgage Bank, one of the mortgage companies poised to benefit from the government’s N1tr real estate funds aimed at boosting home ownership. Also, Investors are positioning in the expectation that the company’s bid to acquire a commercial banking license would boost its value. The share price of Abbey closed by a significant 75.48% in the month of April, compared to its opening price; followed by Union Dicon, which chalked 70.10%; while ABC Transcorp grabbed 49.28%; and International Breweries, 44.71%.

Overall, companies at the top gainers of April’s gainers’ table included: Wema Bank 41.12%; and Vitafoam, 40.24%; among others.

Worst Performing Stocks for April

The top laggard was VFD Group, which lost 60.81% in the aftermath of its price adjustment for the five new shares for one held, in addition to the N2.50 cash dividend, even as the stock’s strong rebound has revealed value considering its latest Q1 numbers; it was followed by Sunu Assurance which shed 27.97%; John Holt, 25.06%; PZ, 21.83%; and HMcall, 19.93%; on the back of selloffs and weak sentiments for these stocks.

Technical View on Monthly Time Frame

The NGX’s index action has remained technically on an uptrend in a bullish channel for over six years, in the midst of mixed sentiments and volatility as market fundamentals continue to change. The inflow to equity assets as revealed by the Money Flow Index was relatively weak at 49.34 and looking down, even as RSI stood at 75.41 in the face of  portfolio repositioning on financials.

Where To Invest And Expectations For May, June

The global economy and market remain dicey and gloomy, as seen in the recent trade war and geopolitical tensions, even as the World Bank downgraded global economic growth outlook on the back of shift in trade policy and tariffs environment.  This is amidst mounting concerns by governments and investors over the oncoming global recession, due to oscillating oil prices, dwindling resources, and confidence.

Back home, the slow economic recovery and reality will continue in the new month as we expect more economic data and events to confirm the real wellbeing of the nation, especially as crude oil trade below the benchmark price of $75 for 2025 budget at $66.12, at a time oil remain the major source of revenue for budget financing.

In May, we expect the release of the April Consumer Price Index (CPI) by the National Bureau of Statistics (NBS). This will show the whether or not inflation is still on the rise after the rebasing that was done in January 2025, just as Stanbic IBTC Group released its Purchasing Managers Index (PMI) for April which rose to 54.30points from February 53.70 points. One can only imagine what that of April will look like due to impacts of rising insecurity, high power tariff and oscillating exchange rate that affected manufacturing companies in 2023 and 2024.  The nation’s GDP is also expected this month and would confirm the true state of the economy.

With corporate earnings reporting season extended to May, companies’ earnings fundamentals and dividend declaration will support the ongoing mixed outlook in the market since many high cap stocks have this month as their qualification dates and markdown. This will keep the market oscillating and at the same support recovery.

Traders and investors who understand the importance of combining fundaments and technical analysis in making investment decisions in the stock market should take this opportunity to position in some sectors for medium and short-term gains, especially banking, telecom, industrial, agribusiness and consumer goods after a careful study of recent numbers being made available to the market.

What to expect in May and June

• Release of more quarterly and full-year earnings. These blue-chip companies’ earnings reports will strengthen market fundamentals, if march end year accounts beat expectation.
• Continuation of the oscillating trend of equity prices as a result of the repositioning of portfolios along the line of positive numbers and profit-taking. Also due to the upcoming MPC meeting, the second half of this year will be dominated by mixed sentiments depending on the outcome of the US trade policy negotiation that is ongoing.
• Market outlook for May is mixed with the popular saying that traders “sell in May and come back in October,” which may not be applicable in the current global trend of the stock market as shift in trade policy has changed many things and factors.  In the Nigerian market, however, this theory has been defied eighteen times over the past 27 years when the market was up. But with the buying sentiment and stronger Q1 numbers so far.
• The sustained low valuation in the market may trigger high demand for stocks as players realign their portfolios. However, there is a need to invest wisely, using bids, offers, and volume when making decisions as a trader.
• Managing risk and protecting capital at this point is very important, so you will be able to determine when to buy or sell, by watching stocks and the market, using technical analysis.  Look for investdata daily sentiment report and join the 12 noon  live session every Mondays, Wednesdays and Fridays.
• Let numbers released by the companies guide your decision and time to stay in that position.
• Full-year earnings reports of March year-end companies will start hitting the market this month until June.

As the market phase is changing, it is time to combine fundamentals and technical tools to make decisions by knowing the support and resistance levels to reposition or exit any position. You must know the market cycle, or particular stocks therein are to successfully manage your trading and investment risk. For stocks that should be on your shopping list to buy in these seasonal changes as the year unfolds, sign up to INVESTDATA BUY AND SELL signal setup/ Q & A session with Ambrose Omordion.

Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
Tel: 08028164085, 08032055467