Nigerian stocks near 255,000 resistance as market signals overbought risk

Nigerian stocks are currently trading near the 255,000 resistance level, with market indicators signaling potential overbought conditions. The NGX ASI, a key market benchmark, has gained over 63% in 2026, reaching a new high just above 254,000. The Daily RSI currently hovers between 68-72, indicating light overbought conditions.

Over the past month, institutional buying was observed in tier-1 banks, such as GTCO, Zenith, and MTN Nigeria. These banks trade at single-digit P/E ratios or below book value, even during prolonged surges.

The current market structure is a structural primary uptrend, supported by high interest rates and inflation suppressing institutional demand for cash-generative, high-yielding blue-chip stocks. Institutional concentration is heavily focused on a few liquid blue-chips, providing enough buying power to sustain an extended RSI rally. However, chasing breakouts above 255,000 carries a near-term risk, particularly with overbought daily indicators.

A short-term consolidation or small correction down to the 245,000 support zone is expected before a move higher. Buying fundamental blue-chip names on dips that test this recent support level offers an attractive risk/reward equation. Key risks include fixed-income yield trends and seasonal profit realizations before year-end portfolio rebalancing.

Large-cap industrials are currently leading the index breakouts, while telecoms are benefiting from operational margin recoveries and tariff revisions. Foreign currency earners, such as Seplat Energy, are also benefiting from dollar revenue and strong global energy prices.