NGX Sustains Bullish Momentum Amidst Strong Earnings, Profit Taking

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The market started the week on a negative note, ended on a bullish tone with a 2.00% gain, translating to a N1.35tr increase in market value. As a result, market capitalization reached N67.418tr, while the All-Share Index stood at 108,053.95 basis points. The upward momentum was primarily driven by Dangote Cement Plc shares, which make up roughly 12.13% of the total market capitalization.

Year-to-date, the All-Share Index has gained 4.98%, while the NGX 30 is up by 5.27%, with the Banking Index rising by 14.59%, far behind the Pension Index at 9.80%. The Insurance Index is up 3.02%, just as the Consumer Goods Index increased by 0.08%. However, the Oil and Gas Index recorded a negative YTD return of 3.33%.

In terms of market breadth, 65 stocks advanced, while 31 declined, with advancing stocks outnumbering decliners by a ratio of 2.1-to-1.

NGXASI Weekly Chart

On 13th February the All-share index hit a new all time high of 109,172.04 points before retreating to 108,053.95 points during last trading day, by honouring the valentine day by painting the customs street red.

Retracement or retreat is part of market dynamics, and it is essential that investors do not see it as a red flag but an opportunity to reposition themselves. The market has broken above its last resistance points to an all time high above 109,000 points before the last retracement.

There is still significant funds in the market as revealed by our money flow reading above 70 with a relative strength index of 71, showing there is still much room for northward movement. MACD is currently above the signal line with the histogram standing tall (Pointing upward). There is no cause for alarm as the market is poised to continue in its bullish direction and slight retracement should not be a matter of concern. Investors should position themselves.

Honeywell Flourmill Weekly

Leading the top gainers chart for the week was Honeywell Flour Mill Plc which surged 47.06% from N9.52 to N14.00, driven by increased demand in the consumer goods sector. UPDC Plc followed with a 45.95% increase from N2.59 to N3.78, benefiting from positive investor sentiment in the real estate sector, while VFD Group Plc saw a 30.63% rise from N44.40 to N58.00, reflecting its recent strong financial performance, ahead of Smart Products Nigeria Plc which climbed 30.00% from N0.20 to N0.26. SUNU Assurances Nigeria Plc gained 27.94%, moving from N5.01 to N6.41, as investors showed confidence in the insurance sector.

Daar Communications Weekly Chart

On the decliners chart, Daar Communications Plc lost 13.58%, dropping from N0.81 to N0.70, following the weak investor interest in the media industry stocks. International Energy Insurance Plc fell 10.80%, from N2.50 to N2.23, amid profit-taking activities. BUA Foods Plc, a major player in the consumer goods sector, saw a 10.00% decline from N415.00 to N373.50, possibly due to price corrections after its previous gains. Golden Guinea Breweries Plc dipped 9.91% from N7.87 to N7.09, while Eunisell Interlinked Plc dropped 9.67% from N13.34 to N12.05, reflecting bearish sentiment in the industrial sector.

Trending in the Economy: Nigerian lawmakers approved a N54.99 trillion (about $36.6 billion) budget for 2025, surpassing President Tinubu’s revised proposal of 54.2 trillion naira. The budget includes a $200 million provision to address gaps from the U.S. suspension of aid to Nigeria’s health sector. Focused on security, infrastructure, and combating rising living costs, it also projects a deficit of 1.52% of GDP.

Nigeria’s manufacturing sector showed a slight improvement in January 2025, with a BCM of -0.66, up from -2.43 in December, despite ongoing challenges like high production costs and weak demand. While agriculture saw growth, key sub-sectors like textiles and chemicals underperformed, and inflation and high interest rates continued to pressure business conditions.

Global Market and Oil: Wall Street ended mixed on Friday, with Nvidia rising and Microsoft falling, while Treasury yields dropped after President Trump’s tariff plan was announced without new tariffs. Yields fell for a second day, following weaker-than-expected retail sales, which declined 0.9% in January. The 10-year bond yield dropped 7 basis points to 4.44%.

The Nasdaq 100 gained 0.4%, led by Nvidia (+2.6%) and Apple (+1.3%). Microsoft fell 0.5%, and Amazon dropped 0.7%. The S&P 500 edged down 0.01%, the Nasdaq rose 0.41%, and the Dow dropped 0.37%. Seven of 11 S&P sectors declined, with consumer staples and healthcare hit hardest. Trading volume was lighter than usual, with 14.4 billion shares exchanged.

For the week, the S&P 500 gained 1.5%, the Nasdaq rose 2.6%, and the Dow added 0.5%. Airbnb surged 14% after strong earnings, while DaVita fell 11% on a lowered profit forecast. Applied Materials dropped 8%. U.S. markets will be closed Monday for Presidents Day.

Oil prices fell, but losses were limited by a delay in U.S. tariffs. Brent crude dropped 0.37% to $74.74, and WTI decreased 0.77% to $70.74. For the week, Brent gained 0.11%, while WTI fell 0.37%.

Trump called for peace talks between Russia and Ukraine, with a potential deal lifting sanctions and boosting energy supplies. Russian oil exports might continue if workarounds to U.S. sanctions are found.

Fundamentals and Technicals

Companies are reporting stronger-than-expected earnings, boosting investor confidence and driving demand for stocks. As earnings season unfolds, positive surprises are likely to further propel the market. Institutional investors are digesting earnings reports and repositioning their portfolios, pouring significant funds into the market. This influx of capital is creating a strong foundation for sustained growth. There is hardly no stock on the exchange whose earnings was good without a significant surge in its share price.

Governments are tired of debts. That is why yields on 364-day T-bills are declining. This has made investors to shift focus from fixed-income securities to equities in search of higher returns. This migration of capital is adding fuel to the market’s upward trajectory. Every investors want capital appreciation and they go every length to locate the best investment haven.

Sectorial Indexes Performance

NGX Banking Index Weekly Chart