Market Update for July 2
The bull resurfaced on the Nigerian Exchange at midweek’s session, following a strong buying interest across major sectors of the market which halted four consecutive sessions of pullbacks to reflect the presence of institutional players as revealed by the very high traded volume. This occurred in the midst of strong market breadth that supported various breakouts by many stocks and sectorial indexes.
The buying pressure pushed many stocks to new 52-week highs, confirming the reversal bottom chart pattern mentioned in our update for Tuesday before the trading opened. Continuation of this trend needs confirmation as Thursday’s trading opens. The bullish sentiment weighed on the composite NGX All-Share index as it closed higher on position taking in low, mid and large cap stocks. This rebound followed, signaling another round of accumulation near a strong support level of 119,695.35 basis points, as market players digest the March year-end numbers and dividend payouts, ahead of the consumer price index report for the month of May; first half earnings reporting season in the new month of July and the Central Bank of Nigeria policy meeting holding later this month.
Midweek’s rebound indicates another opportunity for new entry and bargain hunting, as the market gathers more energy to markup within the consolidating range to avert entering into the decline phase, especially if the expected corporate numbers beat market expectation in the face of the Monetary Policy Rate remaining unchanged at the forthcoming policy meeting of the CBN. The volume traded at the end of the session indicates a situation where smart money may markup prices in the midst of strong positive market internals while investors latch on pullbacks to buy into value ahead of company’s quarterly earnings reports.
The evidence of institutional investors presence is still in the market to reveal a level of confidence around government’s economic reforms, while foreign investors are also seeing value on the NGX, a situation that has 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.
All eyes are still on expected 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 pulled back on a selling 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 sentiment and technicals on the NGX. 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 as revealed by the candlestick formation and momentum indicators shows that the ADX is strong to read 63.03 points, while RSI and Money Flow Index were up at 78.20 and 55.86 points against the previous session’s 76.59 and 49.08 points respectively. NGX at this point call for players to be watchful and trade wisely in the midst of distribution phase and selling 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 at midweek were stead to continued its oscillation, trading at $67.73 per barrel, in the midst of US crude inventories rising and ceasefire in Mideast for peace talks continues to hold, and Ukraine-Russia war. Even as OPEC call for investment in the industry to avert shortage in supply in 2030. The ongoing developments will deflate inflation and rate hikes if peace is achieved. All eyes are on oil cartel meeting this weekend. 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.
Midweek trading started in the upside and it was sustained for the rest of the session, despite oscillating on position taking in blue chip companies and other stocks. This situation pushed the NGX’s index to intra-day high of 120,339.90bps from its lows of 119,717.20bps, before closing above its opening level at 120,340bps.
Market technicals were strong and positive with higher volume when compared to previous session in the midst of breadth that favors the bulls on a selling sentiment as revealed by Investdata’s Sentiments Report showing 100% buy position and 0% sell volume. The total transaction volume index stood at 1.41points, just as energy behind the day’s performance was relatively strong, as Money Flow Index was inched higher to read 55.80pts, from the previous day’s 49.08pts, indicating that funds entered the market.
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Index and Market Caps
The key performance index NGXASI, at the close of the session trading gained 567.83 basis points, closing at 120,339.90bps from 119.741.23bps, representing a 0.50% growth, while market capitalization rose by N500 bn to close at N76.17tr from the previous day’s N75.80tr, representing a 0.42% value gain.
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Meanwhile, the upturn was driven by accumulation and buying interest in the shares of Cadbury, CAP, CWG, May/Baker, Honeywell, Zenith Bank, Accesscorp, NB, NGXGroup and Wema Bank among others, which impacted positively on Year-To-Date gain which inched higher to 16.92% while Market capitalization gain stood at N21.95tr, representing 21.37% increase over its opening level for the year.
Bullish Sector Indices
Sectoral performance indexes were up except for the NGX Energy that closed lower 0.45%, while the NGX Consumer goods led the advancers after gaining 1.78%, followed by Insurance, Industrial goods and Banking with 0.76%, 0.52% and 0.19% respectively.
Market breadth was positive as gainers outnumbered losers in the ratio of 61:15, while activities in volume and value were up, after investors exchanged 1.04 billion shares worth N12.10bn, with volume driven by trades in Royal Exchange, Japaul Gold, Ellah Lakes, Wema Bank and Chams.
C & I Leasing and Ellah Lakes were the best performing stocks, gaining 10% each, closing at N5.05 and N9.24 per share respectively on the back of sentiment and market forces. On the flip side, Deap Capital and John Holt lost 9.09% and 5.41% respectively, closing at N1.00 and N7.00 per share, purely on profit taking and selloffs.
Market Outlook
We expect positive sentiments to continue on bargain hunting and sector rotation, as investors digest March yearend accounts and dividend payout 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
