Nigerian Equities Market Sheds 1.16% as Profit-Taking Dominates Trading Last Week

Nigeria’s equities market ended trading on a bearish note last week, shedding 1.16% as profit-taking dominated investor activity.

The Nigerian Exchange Limited (NGX) All-Share Index (ASI) dropped to 95,973.45 points, down from the previous week’s high of 97,100.31 points, while market capitalization also fell marginally from N55.132 trillion to N55.129 trillion.

This decline followed a week of mixed trading marked by sell-offs in industrial and consumer goods stocks and cautious bargain hunting in sectors like oil & gas, insurance, and banking.

The market experienced a downturn as investors sought to lock in gains from earlier rallies, particularly in the industrial and consumer goods sectors.

Leading stocks in these sectors faced significant pressure as profit-taking intensified.

However, the week wasn’t without its bright spots as some investors shifted their focus toward lower-valued stocks in the oil & gas, banking, and insurance sectors, seeking opportunities in the midst of market volatility.

Market analysts noted that the lack of clear economic drivers and ongoing concerns about the global economic environment contributed to the cautious sentiment.

According to Vetiva Research analysts, the equity market’s risk-off stance persisted throughout the week, with little momentum to drive the market into positive territory.

In their August 22 note to investors, Vetiva analysts observed, “With the capital market environment bereft of drivers to alter the risk-off stance towards the equity market, we do not foresee a situation where the market will end the week in the green; that said, we expect buy-side interest to remain skewed towards low-mid cap names.”

The month of August has proven challenging for the market, with the ASI having declined by 1.42% so far this month.

Despite this, the market remains up by 28.35% year-to-date, reflecting earlier gains made during the first half of 2024.

However, analysts have urged investors to remain cautious as the market faces growing pressure from global economic uncertainties, rising inflation, and concerns over potential interest rate hikes.

The NGX’s performance this week highlights the delicate balance between profit-taking and bargain hunting as investors navigate a complex market landscape.

While some sectors, particularly oil & gas, saw buying interest, the overall market outlook remains cautious as investors await more favorable conditions and economic signals to reignite market momentum.

Looking ahead, analysts expect market sentiment to remain mixed, with investors likely to continue seeking value in lower-cap stocks while remaining vigilant to broader market risks.

The next few weeks will be critical in determining whether the equities market can regain its upward trajectory or continue to face downward pressure as profit-taking and economic concerns persist.