Market Update for July 29
The bullish ascendency on the Nigerian Exchange continued on Tuesday following increased buying momentum and sector rotation as market players digest corporate earnings released so far in the midst of influx of earnings reports that beat investor expectations ahead of month-end rebalancing. Positive reactions to impressive corporate numbers pushed the benchmark NGX All-Share index higher even on an above average traded volume in the midst of positive market breadth and the extended markup phase of the exchange as reflected in the buying sentiment and bargain hunting for value companies.
The NGX again made another new all-time high, breaking out the 137,000 basis points psychological line on the strength of price appreciation of highly priced stocks and others that hit new 52-week highs across the major sectors of the market. This has revealed the broader buying sentiment in the market as money flow index read 100 points, while staying upbeat for the ninth consecutive session. The inflow of more corporate earnings is expected ahead of the July 31 deadline for submission of unaudited half-year earnings. Already, numbers released so far have given an insight into what market players should expect going into the future, a situation that has fueled renewed investors interests and confidence while accumulating low, mid and high stocks.
The top chart pattern formation in the midst of smart money marked up prices on a declining volume even, but the volume pattern reveals higher than the previous session and 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 more corporate numbers pouring in. There is also the impact of scorecards from Transcrop, FCMB, Nestle, Cadbury, and even some companies announcing interim dividend for half year. Presco and Transcorp declared dividends of N20 and 40 kobo respectively.
The market is still at a critical level of either a reversal, or continuation of uptrend, with strong momentum as more boards are meeting to approve their Q2 earnings reports. 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 recent trade agreement between EU and US had reduce the danger of trade war ahead of August 1, 2025 deadline for effective take-off of trade partners which continues to drive sentiment, even as China and US are still talking in the midst of geopolitical tensions arising from the Middle East ceasefire. This has impacted mixed sentiment in major stock markets of the world. Nonetheless, there is need to avoid panic selling, even as profit booking could arise. 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 higher on a buying sentiment, thereby creating the perfect setup for high probability of continuation to catch better-than-expected corporate earnings to reposition 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 95.01.
Market pulse as revealed by the candlestick formation and momentum indicators shows that the ADX is very strong to read 83.95points, while RSI and Money Flow Index were up at 96.01 and 100 points against the previous session’s 95.01 and 100 points respectively. NGX at this point call for players to be watchful and trade wisely in the midst of markup, distribution 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 Tuesday inched higher to continued its oscillation, trading at $70.91per 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.
Meanwhile, Tuesday’s trading started in the upside which was sustained for the rest of the session on buying interests across the major sectors and large cap companies. This situation pushed the composite All-Share index to its intra-day high of 137,995.29bps from its lows of 134,928.90bps, before closing above its opening level at 137,912.90bps. Market technicals were positive and strong with higher volume when compared to previous session in the midst of breadth that favors the bulls on a buying sentiment as revealed by Investdata’s Sentiments Report showing 97% buy position and 3% sell volume. The total transaction volume index stood at 1.00points, as impetus behind the day’s performance was strong, as Money Flow Index was flat to read 100pts, from the previous day’s 100pts, indicating that funds entered the market.
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Index and Market Caps
The NGXASI gained 2,540.65bps, closing at 137,912.87bps from 135,166.51bps, representing a 2.03% growth, while market capitalization rose by a further N1.7 trillion to close at N87.19tr from the previous day’s N85.46tr, representing a 2.03% appreciation in value.
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Tuesday’s upturn was driven by demand and accumulation in the shares of MTNN, Dangote Sugar, Nascon, Berge Paints, Wapco, Learn Africa, Okomu Oil and Hmcall among others, which impacted positively on Year-To-Date gain which inched higher to 33.99% while Market capitalization gain stood at N36.18tr, representing 36.93% increase over its opening level for the year.
Bullish Sector Indices
Sectoral performance indexes were higher, except for th NGX Consumer Goods that closed lower with 0.30%, while NGX Industrial goods index led the advancers after gaining 2.93%, followed by Insurance, Banking and Energy with 1.90%, 1.62% and 0.19% respectively.
Market breadth was positive as gainers outnumbered losers in the ratio of 50:24, while activities in volume and value were up, after investors exchanged 940.80 million shares worth N30.63bn, with volume driven by trades in Fidelity Bank, Royal Exchange, Jaiz Bank, Universal Insurance and Accesscorp.
Berger Paints and Learn Africa were the best performing stocks, gaining 10% each, closing at N34.10 and N6.93 per share respectively on the back of sentiment and market forces. On the flip side, Abbey Mortgage Bank and NNFM lost 10% each, closing at N7.20 and N93.15per share, purely on unimpressive numbers and profit booking.
Market Outlook
We expect positive sentiments to continue on sector rotation and reaction to corporate scorecards, as more corporate earnings expected in the midst bargain hunting and cautious trading, while investors analyze earnings release so far and buying into value in the midst of 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
