Market Update for June 30
The last trading day of June on the Nigerian Exchange had a mixed session in the face of profit taking and end of the quarter window dressing to close flat on a very high traded volume and positive market breadth reflecting the month’s bullish momentum and positive outing, following which the benchmark NGX All-Share index returned 7.37% for the month. This sustained the second quarter uptrend to breakout various psychological lines between 113,000 and 121,000 basis point, hitting a new all time high of 121,264.20bps before pulling back on profit taking and portfolio rebalancing ahead of the Q2 earnings reporting season in the new month of July and Central Bank of Nigeria policy meeting later in the month.
Within the period many low, mid and high cap stocks made new 52-week highs, as traded volumes surged above average to indicate strong momentum and technicals that supported the market for the period. The index’s action at the end of Monday’s trading session formed a classic Doji chart pattern that indicates indecision and uncertainty in the market after the NGX pulled back for three consecutive sessions.
At this point buyers and sellers are not in control, a situation that reveals that the market is in a state of equilibrium, waiting for a trigger or information. Meaning that traders are waiting for confirmation before making a buy or sell decision at this moment of cautious trading.
The increasing traded volume in recent times signals institutional investors participation and investor confidence around government’s economic reforms, while foreign investors are also seeing value on the NGX, a situation that had supported inflow of funds into the market and the economy at large. Nevertheless, the expected mixed trend in Q3, may not halt the bull trend, if the expected corporate earnings beat expectation. Already, the slowdown in fixed income market rates has triggered money flowing into the market as last week’s TB primary market auction rate declined across all tenors.
Also, market players continue to read and digest the recent macroeconomic reports and unfolding global uncertainties due to the Middle East ceasefire moves for peace talk, which had impacted positively on 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 down indicating that funds are leaving to the market on profit taking that presents opportunities to buy low and sell high in the midst ongoing volatility and overbought state of NGX. The index slide marginally on a mixed interest, 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 fundamentals and technicals on the NGX and the economy. But RSI signal overbought market at the current level or zone, which also called cautious trading and know when to cash out profit even when taking positions.
Market pulse on Monday as revealed by the candlestick formation and momentum indicators shows that the ADX is strong to read 61.19 points, while RSI and Money Flow Index were down at 78.74 and 54.47 points against the previous session’s 78.89 and 67.22 points respectively. NGX at this point call for players to be watchful and trade wisely in the midst of distribution phase 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 Monday inched lower to continued its oscillation, trading at $66.75 per barrel, in the face of ceasefire in Mideast for peace talks, and Ukraine-Russia war.
The Organisation of Petroleum Exporting Countries (OPEC), in all these is seemingly confused. The ongoing developments will deflate inflation and rate hikes if peace is achieved. 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, trading on Monday’s started in the upside before pulling back to oscillate for the rest of the session as buyers and sellers fight for control, as there were buying interest in some stocks and also profit booking in others. This situation pushed the NGX’s index to intra-day low of 119.696.50bps from its highs of 120,401.30bps, before closing slightly below its opening level at 119.978.60bps.
Market technicals were mixed and positive with higher volume when compared to previous session in the midst of breadth that favors the bulls on a mixed sentiment as revealed by Investdata’s Sentiments Report showing 40% buy position and 60% sell volume. The total transaction volume index stood at 1.95points, just as energy behind the day’s performance was relatively strong, as Money Flow Index was inched lower to read 54.47pts, from the previous day’s 67.22pts, indicating that funds left the market.
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Index and Market Caps
The NGX All-Share Index at the end of the session lost 17.19 basis points, closing at 119,978.57bps from 119.995.76bps, representing a 0.01% drop, while market capitalization fell by N10.89 billion to close at N75.95tr from the previous day’s N75.96tr, representing a 0.01% value loss.
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The session downturn was driven by profit taking in the shares of Julius Berger, Oando, Wapco, Zenith Bank, Accesscorp, Stanbic, NB and GTCO among others, which impacted mildly on Year-To-Date gain which inched lower to 16.57% while Market capitalization gain stood at N21.56tr, representing 21.24% increase over its opening level for the year.
Mixed Sector Indices
Sectoral performance indexes were mixed, as the NGX Consumer Goods and Insurance indexes closed 0.79% and 0.69% higher respectively, while the NGX Banking led the decliners after losing 1.09%, followed by Industrial goods and Energy with 0.42% and 0.29% respectively.
Market breadth was positive as gainers outnumbered losers in the ratio of 34:31, while activities in volume and value were up, after investors exchanged 2.03 billion shares worth N44.34bn, with volume driven by trades in Oando, Accesscorp,UACN, Ellah Lakes and Caverton.
CWG and Caverton were the best performing stocks, gaining 10% each, closing at N12.65 and N5.74 per share respectively on the back of sentiment and market forces. On the flip side, Learn Africa and Julius Berger lost 10% and 9.97% respectively, closing at N4.59 and N112.00 per share, purely on profit taking.
Market Outlook
We expect mixed sentiments on bargain hunting and sector rotation, as traders wait to confirm direction after Doji chart pattern formation. Investors buying into value as they digest dividend payout of March year end and others 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
