Activities at the Nigerian equities market operated by the Nigeria Exchange Group, took a negative turn last week as pressure from profit-taking resulted and dominated trading sessions.
Consequently, the All-Share Index took a sharp 2.03 percent week-on-week haircut, closing at 97,432.02 points as investor sentiment remained subdued, leading to significant sell-offs across key sectors, particularly in Industrial, Insurance, and Consumer Goods.
Market analysts insist that the reported decline reflects cautious trading behaviour amid ongoing portfolio rebalancing, as investors continue to grapple with economic uncertainties and the latest macroeconomic data releases.
The market capitalisation dropped in tandem by 2.03 percent week-on-week to settle at N59.04 trillion, wiping out N1.22 trillion in gains from prior weeks.
As a result, the year-to-date return of the index now stands at 30.30 percent, with more stocks declining than advancing, as 45 stocks lost ground compared to 39 gainers.
Sectoral performance over the week reflected widespread losses.
The NGX-Industrial Goods sector was notably impacted, declining by 3.70 percent week-on-week, driven by significant drops in stocks like BUA CEMENT, UPDC, and CAVERTON.
Both the Consumer Goods and Insurance sectors also recorded declines, with losses of 0.22 percent and 0.40 percent, respectively, as stocks such as REGALINS, ROYALEX, CADBURY, HONYFLOUR, and MCNICHOLS saw reduced trading activity and price depreciation.
In contrast, the NGX-Oil & Gas sector emerged as the primary gainer, up by 1.15 percent week-on-week despite continued sell pressure on ARADEL.
The positive performance in this sector was largely buoyed by robust sentiment surrounding CONOIL and ETERNA. Additionally, the NGX-Banking index posted modest gains of 0.19 percent week-on-week, thanks to upward price movements in GTCO, ZENITH, and FIDELITYBNK.
Market trading activity indicated a mix of high and low momentum across stocks of all capitalisations, with rebalancing activities intensifying sell-off pressure.
The number of trades increased by 13.7 percent from the previous week, reaching 46,848 deals.
However, the weekly trade value fell sharply by 36.4 percent to N54.63 billion, while the traded volume rose by 26.9 percent week-on-week to 2.72 billion shares.
Among the top weekly advancers were EUNISELL, JOHNHOLT, UPL, LIVESTOCK, and NNFM which drew strong investor interest to record 61 percent, 20 percent, 18 percent, 12 percent and 12 percent gain respectively.
Conversely, the top decliners included ARADEL down by 26, CAVERTON 20 percent, ELLAHLAKES, and REGALINS 13 percent each, as well as ROYALEX which lost 11 percent of its share price.
Commenting on the market performance of the week under review, analysts at Cowry Assets Management Limited said the ASI’s decline underscores continued caution among investors, many of whom are taking a risk-off stance amidst fluctuating economic indicators, uncertain earnings outlooks, and ongoing corporate actions.
According to them, “Persistent liquidity concerns and inflationary pressures appear to have dampened investor enthusiasm, with many awaiting clearer signals on monetary policy and potential fiscal measures before making fresh commitments.”
They insisted that the market is likely to remain volatile in the near term considering the cautious sentiments of investors.
They are however hopeful that positive developments, such as improved corporate earnings or stabilising macroeconomic conditions, could help bolster investor confidence and drive a recovery.
However, researchers at Cordros Securities Limited say they expect choppy trading activities this week as investors balance their portfolios based on the assessment of the third quarter corporate earnings reports released in recent time.
Also, data obtained from FMDQ, shows total inflows into the Nigerian Autonomous Foreign Exchange Market rose to a five-month high in October, increasing by 40.2 percent m/m to $3.04 billion in October from $2.17 billion reported in September.
Performance analysis shows that the improvement was primarily due to a substantial increase in inflows from foreign sources which contributed 44.6 percent of total inflows.
In comparison, collections from local sources were responsible for 55.4 percent of total inflows for the month but dropped for the second consecutive month.
Specifically, inflows from foreign sources increased by 292.7 percent m/m to $1.37 billion as against $345.50 million in September, reflecting the highest level in seven months in line with improved carry trade opportunities in the capital market over the review period.
As a result, higher accretions were recorded across the FPI which rose 510.9 percent m/m and FDI up by 44.6 percent m/m segments, while inflows from other corporate segments dropped by 15.1 percent m/m.
Elsewhere, inflows from local sources declined by 7.5 percent m/m to $1.69 billion in October compared to $1.82 billion posted in September, driven by declines across collections segments such as the individuals which dropped by 30.6 percent m/m, CBN declined by 14.3 percent m/m, and non-bank corporates down by 8.6 percent m/m, amid a marginal improvement in the exporters/importers segment which grew by 0.6 percent m/m.
However, while market analysts have acknowledged and commended the recent liquidity influx from foreign investors, they express concerns over the likelihood to sustain the trend given the following conditions: unfavourable macroeconomic conditions; still weak structure of the Nigerian FX market; and sustained volatility in the Naira.
Additionally, they anticipate that the limited inflows from the CBN may pose downside risks to overall liquidity conditions in the near term, potentially dampening market confidence and heightening pressure on the Naira.
