Market Update for May 6
Bullish momentum on the Nigerian Exchange continued on Tuesday on the back of increased buying interests in highly priced stocks and blue-chip companies a situation that weighed on the benchmark NGX All-Share index as it closed significantly higher on an above average traded volume. This expanded positive market breadth in the midst buying sentiment and reactions to a better-than-expected Q1 corporate earnings, as market players continued to rebalance their portfolios on the strength of earnings and sector rotation.
The NGX sustained its three consecutive sessions of bull transition to reflect the increasing investors confidence in the market, even as its counterparts across the globe are witnessing selloffs and mixed sessions. This is a pointer to the historical trend of May defying the trade mantra of sell in May and comeback in October. The exchange recorded 18 days of positive close in the past 27 years and down just 9 time. The expectation of more audited accounts especially March financial year-end and payment of dividend declared to support funds flowing into the market as investors reinvest their dividends.
The impact of outstanding corporate earnings from different sectors across all classes of stocks including low, mid and high cap had continued to attract players to the market considering the prevailing low price to earnings of the market and individual stocks. As all eyes are still observing keenly the unfolding events globally as regard the impact of the U.S trade policy on the world economy, even as negotiations are ongoing to find a lasting solution to a problem that has already triggered a shift in global trade order. This problem is, however, a plus for some emerging economies like Africa, among others provided the right steps are taken.
The NGX index broke out the 107,000 and 108,000 psychological lines on an above traded volume to support uptrend and continuation mark phase that needs confirmation in the face of buying sentiment and expectation of more earnings reports. As investors and traders continue to navigate and watch the trend to take advantage of likely uptrend on the strength of companies’ performance. Players should target fundamentally sound stocks as they position in value and defensive stocks with strong earnings power and positive technicals in the face of sector rotation persisting. The market is still at its recovery mood, even as it’s retracing up in the midst of sector rotation, consolidation moves in some industries and sectors.
Technically, money flow and other momentum tools are up, revealing that funds entering the market and strength that presents opportunities to buy low and sell high in the midst ongoing volatility and buying sentiment. As the index closed higher on buying sentiment and position taking, thereby creating the perfect setup for high probability of continuation to catch dividend season and Q1 numbers to reposition at the right price. Just as, the index trades above T-line and the two moving averages of 50-EMA and 50-SMA, that signaled recovery and strength in the midst of changing market fundamentals and technicals on the NGX and the economy.
Investors sentiment as revealed by candlestick formation and momentum indicators, shows that the ADX is looking up to read 18.68 points, while RSI and Money Flow Index were up at 71.80 and 76.85points against the previous session’s 62.24 and 70.68 points respectively. At this state of the market, players should watch the trend and trade wisely in the midst of funds entering into the market on a buying 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 gradually taking position amid revaluation of the market and short-term opportunities, looking at economic events in the face of policy direction of the government that look inconsistent and global economic outlook in the face of Trump tariffs policy easing.
To navigate the rest of Q2 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 up to continue its oscillation, as it trades at $61.78per barrel, in the face unclear direction of US-China trade talks and OPEC moves to hike production in the coming months. Even as recession narrative remain a concern, as US-Russia peace talk and ceasefire in Ukraine remains on shaky grounds. The trade tariffs negotiations and white house rumor talks flying to drive sentiment and global economic activities, just as geopolitical tensions 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.
Tuesday’s trading started in the green and was sustained for the rest of the session, despite oscillating on profit taking in insurance stocks and positioning in others stocks. This pushed the NGX’s index to intra-day high of 108,377.50bps from its lows of 106,658.90bps, before closing sharply above its opening level at 108,361.10bps.
Market technicals were positive and strong with lower volume when compared to previous session in the midst of breadth favoring the bulls on a buying sentiment as revealed by Investdata’s Sentiments Report showing 99% buy position and 1% sell volume. The total transaction volume index stood at 0.95points, just as momentum behind the day’s performance was strong as Money Flow Index jump to read 76.85pts, from the previous day’s 70.68pts, indicating that funds entered the market.
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Index and Market Caps
At the end of trading, the NGXASI gained 1662.26 basis points, closing at 108,361.50bps from 106,658.90bps, representing a 1.56% growth, while market capitalization rose by N1.05tr, at N68.11tr from the previous day’s N67.07tr, representing a 1.56% value gain.
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Meanwhile, the session upturn was driven by position taking in ETI, Okomu Oil, MTNN, Nestle, Beta Glass, Aradel and Oando, among others. This impacted positively on Year-To-Date gain which inched up to 5.26%, while Market capitalization gain stood at N7.78tr, representing 8.12% increase over its opening level for the year.
Bullish Sector Indices
Sectoral performance indexes rose, except for the NGX Insurance index that closed lower by 1.61%, while the NGX Energy index led the advancers after gaining 2.97% followed by Consumer goods, Banking and Industrial goods with 1.75%, 1.60% and 0.08% respectively.
Market breadth was positive as gainers outnumbered losers in the ratio of 41:25, while activities in volume and value were down, after investors exchanged 475.46m shares worth N13.90bn, with volume driven by trades in Accesscorp,GTCO,UBA, SterlingNG and Zenith Bank.
ETI and Nestle were the best performing stocks, gaining 10% each, closing at N25.85 and N1,210.00 per share respectively on the back of sentiment and impressive. On the flip side, Guinea Insurance and Daarcom lost 8.70% and 6.78%, closing at N0.63 and N0.55per share, purely on profit taking.
Market Outlook
We expect the positive sentiments to continue on reaction to stronger Q1 numbers and sector rotation as investors buy into value in expectation of more Q1 earnings reports in the midst of profit taking and 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
