Market Update for July 24
The Nigerian Exchange extended its bullish run for the 17th back-to-back gain on Thursday, following increased and widened demand for stocks across major sectors in the midst of impressive corporate earnings now hitting the market ahead of next week’s deadline for submission of second quarter earnings. The numbers released so far have given an insight into what players should expect going into the future, which has fueled renewed investors interests and confidence while accumulating low, mid and high stocks thereby weighing heavily on the benchmark indicators which closed higher on a low traded volume and positive market internals as the index touched yet another new all-time high of 133,200 basis points. It therefore formed a top chart pattern which signals the possibility of a reversal or continuation of trend, which needs a confirmation as trading opens on Friday.
With all eyes are on more corporate earnings reports inflow, and market reactions to those already released so far at a time the NGX is at its historic all-time high, which calls for cautious trading and investing at this reflective point of the market. The index broke out the 133,000 psychological line at the overbought region with more stocks and sectors hitting their new 52-week highs, just as momentum indicators like money flow and RSI reading 100 and 94.06 points respectively. It seems strength has returned to the market amid buying pressure ahead of more corporate numbers. The scorecards from Okomu Oil, Champion Breweries, Airtel Africa and Guiness Nigeria were fantastic beating market expectation, just as the interim dividend of N30 from Okomu Oil.
The NGX is still at a critical level of reversing or continuation of uptrend, with strong momentum as the board meetings dates of more companies draw closer for the approval of their Q2 earnings reports. Any pullback at this point will create opportunities for new entry and bargain hunting, as the market expects corporate numbers 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 optimism trade deals and agreements ahead of the August 1, 2025 deadline for effective take-off of trade partners which continues to drive sentiment, even 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 94.06.
Trade metrics as revealed by the candlestick formation and momentum indicators shows that the ADX is very strong to read 80.95points, while RSI and Money Flow Index were up at 94.06 and 100 points against the previous session’s 93.70 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 Thursday inched up to continued its oscillation, trading at $69.12 per barrel, in the midst of optimism on trade deals and 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, Thursday trading started in the upside and was sustained for the rest of the session, on position taking across all classes of stocks. This situation pushed the composite index to its intra-day high of 133,200bps from its lows of 132,497bps, before closing above its opening level at 133,199.99bps. 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 pressure as revealed by Investdata’s Sentiments Report showing 100% buy position and 0% sell volume. The total transaction volume index stood at 0.88points, 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 benchmark NGX All-Share Index at the end of trading gained 642.54bps, closing at 133,200bps from 132,557.43bps, representing a 0.48% growth, while market capitalization rose by N424bn to close at N84.26tr from the previous day’s N83.86tr, representing a 0.48% appreciation in value.
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The upturn was driven by accumulation and position taking in the shares of First Holdco, Presco, Nascon, Oando, Zenith Bank, Guinness, Ucap, Okomu Oil, GTCO, NGXGroup and Transcorp among others, which impacted positively on Year-To-Date gain which inched higher to 29.41% while Market capitalization gain stood at N34.36tr, representing 34.73% increase over its opening level for the year.
Bullish Sector Indices
Sectoral performance indexes were in green, led by the NGX Insurance index after gaining 2.72%, followed by Energy, Banking, Consumer and Industrial goods with 1.32%, 1.05%, 0.30% and 0.25% respectively.
Market breadth was positive as gainers outnumbered losers in the ratio of 45:33, while activities in volume and value were down, after investors exchanged 681.24 million shares worth N17.02bn, with volume driven by trades in Japaul Gold, UBA, Accesscorp, Conhall and NB.
Academy Press and FTN Cocoa were the best performing stocks, gaining 10% each, closing at N8.47 and N6.60 per share respectively on the back of sentiment and market forces. On the flip side, John Holt and ABC Transport lost 10% each, closing at N6.10 and N4.59per share, purely on profit taking and selloffs.
Market Outlook
We expect mixed sentiments to continue on profit taking and reaction to corporate scorecards, as more corporate earnings expected in the midst sector rotation 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
