Market Update for July 28
The last trading week of July started positively Monday on the Nigerian Exchange, following the continued inflow of better-than-expected corporate earnings which the market is reacting to positively as expected. This is pushing the benchmark NGX All-Share index higher even on a low traded volume in the midst of positive market breadth and the extended markup phase of the exchange as reflected in the buying momentum and sector rotation.
The NGX again made another new all-time high to breakout the 135,000 basis points psychological line on the strength of price appreciation of highly priced stocks and others that hits 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 reads 100 points, just as it stays upbeat for the 18th back-to-back sessions of gains. 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 Unilever Nigeria, May Baker, Ucap, Africa Prudential, and even some companies announcing interim dividend for half year. Unilever, Ucap, Africa Prudential, Transcorp Hotel and Ikeja Hotel declared dividends of 50 kobo, 30 kobo, 10 kobo, 10 kobo and 3 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.
Investor sentiment as revealed by the candlestick formation and momentum indicators shows that the ADX is very strong to read 82.97points, while RSI and Money Flow Index were up at 95.01 and 100 points against the previous session’s 94.69 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 Monday inched up to continued its oscillation, trading at $68.86per 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.
Monday trading opened in the green and was sustained throughout the session, on buying interest across the major sectors and blue-chip companies. This situation pushed the composite index to its intra-day high of 135,427bps from its lows of 134,402.00bps, before closing above its opening level at 135,167bps. 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 75% buy position and 25% sell volume. The total transaction volume index stood at 0.85points, 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
At the end of Monday’s session, the composite NGXASI gained 713.58bps, closing at 135,166.51bps from 134,452.93bps, representing a 0.53% growth, while market capitalization rose by a further N399.88bn to close at N85.46tr from the previous day’s N85.86tr, representing a 0.47% value gain, different from index appreciation due to delisting of MRS Oil Nigeria Plc from NGX.
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Meanwhile, the upturn was driven by demand and accumulation in the shares of MTNN, Dangote Cement, Oando, Champion Breweries, Unilever, Ucap, Okomu Oil and UACN among others, which impacted positively on Year-To-Date gain which inched higher to 31.32% while Market capitalization gain stood at N36.18tr, representing 36.15% increase over its opening level for the year.
Bullish Sector Indices
Sectoral performance indexes were higher, except for NGX Banking that closed lower with 0.69%, while NGX Insurance index led the advancers after gaining 2.54%, followed by Consumer, Industrial goods and Energy with 1.29%, 0.64% and 0.22% respectively.
Market breadth was positive as gainers outnumbered losers in the ratio of 43:25, while activities in volume and value were mixed, after investors exchanged 795.59 million shares worth N23.23bn, with volume driven by trades in Fidelity Bank, FCMB, Japaul Gold, Zenith Bank and Accesscorp.
Academy Press and Champion Breweries were the best performing stocks, gaining 9.99% and 9.98% respectively, closing at N10.24 and N13.55 per share respectively on the back of sentiment and market forces. On the flip side, Livestock Feeds and TIP lost 10% and 9.98% respectively, closing at N8.10 and N14.52per share, purely on unimpressive numbers and profit booking.
Market Outlook
We expect mixed 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
