Nairametrics reported on 26 September 2026 that the Nigerian stock market is showing multiple overbought signals even as the benchmark All-Share Index remained above the all-time high threshold of 252,000 points.
The outlet said the market is on a multi-year bull run supported by liquidity inflows from pension funds and institutional investors, and by easing foreign exchange pressures in some sectors. Technical indicators have pushed many large capitalised stocks into overbought territory, with the Relative Strength Index above 70 for several names, Nairametrics said. (Nairametrics)
Nairametrics noted the rally is concentrated in a limited number of high-quality stocks. Recent strong gains, it said, left several indices buoyed by a handful of large caps while many other stocks lagged, a pattern that can presage profit-taking.
The report identified Banking, Industrial Goods and Oil & Gas among the sectors that have entered the overbought zone. It also said price advances have outpaced near-term dividend growth for some blue chips, lowering dividend yields relative to traditional fixed-income instruments.
The analysis added that price-to-earnings multiples for tier-1 banks and industrial stocks have risen. That, Nairametrics said, has compressed dividend yield ratios and placed limits on operational margins for some firms.
Separately, the outlet said NFEM turnover fell 17.7 percent to $2.25 billion, and that the Central Bank of Nigeria cut the monetary policy rate to 23 percent in its second weekly decline. (Nairametrics)
On risk and positioning, Nairametrics advised investors to tighten trailing stop-loss orders to protect gains on high-beta or speculative holdings. The report recommended realising gains from parabolic or speculative stocks and reallocating into fundamentally sound, dividend-yielding defensive equities. It also warned against lump-sum purchases of blue chips at current levels and urged verification that volume and market breadth support further price moves.
Nairametrics said historical patterns often show the market breadth narrowing in the late stages of a rally, when a few heavyweight stocks carry the index higher while most listings remain unchanged. The outlet warned that an earnings miss, regulatory change or macro surprise affecting one heavyweight could trigger a broader correction.
The report concluded there is no assured indication of an imminent market crash, but that stretched valuations and technical overbought signals increase the risk of mid-term profit-taking and corrections. (Nairametrics)
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