In the immediate past week, equities trading on the Nigerian Exchange Limited closed in negative territory as investors grappled with a mix of profit-taking, sector rotation, and subdued optimism. Interestingly, the market experienced a lot of faltering sessions during the month of November forcing it to close negatively with 0.15 percent decline.
On a week-on-week basis, the benchmark NGX All-Share Index declined by 0.33 percent, settling at 97,506.87 points, underscoring bearish sentiment.
The downturn was driven by a complex interplay of reactions to newly published macroeconomic data and cautious interpretations of Nigeria’s evolving economic narrative.
The week commenced with the release of Nigeria’s third-quarter GDP report, which revealed a year-on-year growth of 3.46 percent.
This growth was powered by the vibrancy of the services and agriculture sectors, which sustained the momentum in the non-oil segment of the economy.
Meanwhile, the oil sector experienced modest gains, reflecting a slight increase in output. These developments, while positive, were juxtaposed against the Monetary Policy Committee’s decision to raise the Monetary Policy Rate by 25 basis points.
According to members of the MPC the less aggressive hike was as usual an attempt to temper inflation, which reached 33.88 percent in October, without stifling fragile growth.
However, investor sentiment seems not to have been influenced by the MPC’s decision as it remained cautious.
However, the market capitalisation dipped southward, shrinking by N184.73 billion to settle at N59.11 trillion. Year-to-date, the NGX All-Share Index has returned 30.40 percent, with market capitalisation gaining 44.5 percent over the same period.
Market breadth tilted negatively, with a ratio of 1.45x, as 32 stocks advanced while 46 declined, reflecting a broad-based sell-off.
Trading activity, however, presented a mixed picture. Weekly traded volume surged by 63.6%, reaching 3.19 billion shares, and the value of trades increased by 52.9 percent to N54.85 billion, signaling a return to higher-value transactions.
Despite these gains, the total number of deals declined by 7.09 percent to 45,112, pointing to a more selective trading environment.
Sectoral performance painted a varied landscape. The NGX Oil & Gas index dropped by 1.93 percent, while the NGX Consumer Goods and Banking indices shed 0.38 percent and 0.28 percent, respectively. These declines were driven by sell-offs in stocks such as SEPLAT, ETERNA, NIGERIAN BREWERIES, and GTCO.
Conversely, the NGX Insurance index emerged as a top performer, gaining 1.23 percent, buoyed by interest in SUNU ASSURANCE and SOVRENINS, while the NGX Industrial Goods index climbed by 0.62%, supported by LAFARGE and UPDC REIT. Notable gainers for the week included SUNU ASSURANCE recording 23 percent positive weekly rally, followed by HALDANE McCALL 22 percent, SOVEREIGN INSURANCE 16 percent, NASCON 13 percent and NEIMETH 11 percent. On the other hand, AUSTINLAZ led the laggards with a steep decline of 26 percent, followed by LASACO 17 percent, ETERNA 16 percent and DEAP CAPITAL 10 percent.
Looking ahead, researchers at Cowry Assets Management say they expect a mixed sentiment as the year draws to a close with the prospect of a Santa rally—a seasonal uptick driven by increased liquidity and end-of-year optimism—lingering in the minds of market participants. However, the technical picture remains clouded.
“The failed bullish hammer candlestick formation highlights lingering market weakness, while momentum indicators suggest a tentative recovery amidst persistent selling pressure. We think investors will likely navigate these conflicting signals, balancing opportunities for bargain hunting against broader macroeconomic concerns.
“The interplay between rising inflation, monetary policy adjustments, and seasonal trends will shape the market’s path as it enters the final month of 2024,” they stated in their weekly market report.
On their part, market analysts at Cordros Securities say they expect investors to exhibit cautious trading to persist this week due to the absence of any significant positive catalyst to boost sentiments.
