The Nigerian Exchange (NGX) posted an all-time high at the first trading session of the week when it surpassed N120 trillion and closed at N122 trillion.
Investors saw substantial N5 trillion returns on investment within a day.
This marks the strongest daily gain since May 23, 2023, driven by a rally in the prices of Dangote Cement, Nestle Nigeria, MTN Nigeria, and 53 other stocks.
The Nigerian Exchange (NGX) appears to be “overbought.” The market has been euphoric following a record bull run, with the All-Share Index (ASI) surpassing 190,000 points.
The NGX All-Share Index (ASI) rose by 7,949.36 basis points, or 4.36%, closing at 190,262.44 points with MTN Nigeria Communication and Dangote Cement stocks appreciating by 10% each.
The ASI Month-to-Date and Year-to-Date returns increased to +15.1% and +22.3%, respectively. Furthermore, the market valuation grew by N5.103 trillion to close at N122.130 trillion.
Market breadth was positive, with 54 stocks advancing and 28 declining. Stocks like ABC Transports, Beta Glass, Ikeja Hotels, McNichols, Oando, Jaiz Bank, Aradel Holdings, and Zichis Agro Allied Industries each recorded a maximum gain of 10 percent.
Technical indicators show overbought signs in Nigerian stock market
RSI Levels: Latest price action showed the Relative Strength Index (RSI) for the entire stock market, and several blue-chip stocks have consistently remained above 70 to 75.
- This month’s bullish rally, fueled by Nigerian pension fund liquidity, has pushed many sector-specific indices—particularly Oil and Gas and Banking—into overextended territory, even though they slightly cooled to about 63 in late January.
A market is said to be “overbought” when prices have increased rapidly or so high that they may have exceeded their underlying value. In the current 2026 environment, many analysts are pointing out high valuations while continuing to forecast growth, given that the NGX has experienced years of robust gains.
Deviation from Price to Moving Average: Many key stocks are trading well above their 200- and 50-day moving averages. Stocks like Seplat Energy and MTN Nigeria have recently hit all-time highs, exhibiting “parabolic” price movements often followed by profit-taking.
Fundamentals bubble hit Nigerian Stock Exchange
The “Pension Fund Effect” shows that the Nigerian Pension Commission (PenCom)’s decision to raise equity investment limits is a key factor in the current “overbought” situation. This has led to “too much money chasing too few stocks,” resulting in trillions of Naira in liquidity.
- Dividend Yield Compression: Many income-generating stocks are losing value compared to fixed-income instruments as interest rates remain high (MPR at 27 percent as of January 2026). Their dividend yields decrease as stock prices rise sharply.
However, the Nigerian major equity market showed a high level of breadth and optimism amidst sector rotation. As is typical in late-cycle markets, investors are shifting from “growth” stocks to “value” and “quality” (defensive sectors), even though the overall market performs well.
- Selective investment in fundamentally strong stocks is expected, with sector-specific developments, dividend yields, and earnings surprises likely influencing market trends.
According to Coronation Asset Management, “we anticipate that sentiment will remain cautious in the near term as investors continue to process recently released full-year results and await additional full-year earnings releases and dividend declarations.”
It’s important to keep in mind that “overbought” does not always imply a “crash.” Markets may remain overbought for months as long as earnings continue to support prices.
Speculative “moonshots” frequently crash first in overbought markets. Financial market pundits often advise retail investors to remain with high-quality businesses that have steady profits, low debt, and robust cash flows.
