Nigeria’s equities market opened the new trading week on a bearish note, shedding N231 billion as cautious sentiment weighed on investor activity.
The All-Share Index (ASI) declined by 0.34 percent to close at 108,126.97 points from its previous high of 108,497.4 points while the market capitalization dipped to N67.383 trillion from N67.614 trillion.
The decline was driven by losses in key stocks with Northern Nigeria Flour Mills (NNFM) leading the laggards after its share price fell by 9.99 percent from N80.60 to N72.55.
Eunisell Interlinked followed, shedding 9.96 percent while UPDC REIT declined by 6.67 percent.
Despite the downturn, trading activity remained robust as investors executed 15,914 deals, exchanging 357.7 million shares worth N9.21 billion.
Stocks like Jaiz Bank, Zenith Bank, Universal Insurance, GTCO and Access Holdings were among the most actively traded on the Nigerian Exchange Limited (NGX).
Market Sentiment and Analyst Projections
Market analysts remain optimistic about a potential rebound, citing the ongoing earnings season and upcoming corporate actions as key catalysts for renewed investor interest.
Analysts at Futureview Research noted that the market could see mixed trading patterns with attention focused on the Federal Government of Nigeria (FGN) Bond auction and undervalued stocks.
“We expect the equities market to trade mixed this week amid investors’ focus on the FGN Bond auction and renewed interest in undervalued stocks,” they said.
Meristem Research analysts also projected a possible market recovery, noting that the recent decision by the Central Bank of Nigeria (CBN) to maintain its monetary policy stance could support positive sentiment in the equity space.
“We expect the NGX-ASI to close in the green zone as investors continue to position in stocks with strong fundamentals, which should help maintain market momentum. The recent hold stance in monetary policy could provide some succor, boosting positive sentiments towards equity assets,” Meristem analysts stated.
With corporate earnings reports and dividend declarations on the horizon, analysts anticipate an increase in buying interest, even as some investors engage in profit-taking activities.
“We acknowledge the possibility of profit-taking as investors capitalize on recent gains. However, we expect the overall sentiment to remain positive, with the local bourse likely to close the week in the green zone,” Meristem analysts added.
United Capital Research echoed similar sentiments, highlighting the impact of high-interest rates in the fixed-income market on equity trading.
“Looking forward, the equities market is expected to maintain its positive momentum as investors continue to position themselves ahead of the FY-2024 earnings season and possible corporate action declarations. Nevertheless, given the elevated interest rate environment in the fixed-income market, we still expect bearish sentiments to linger in the background,” United Capital analysts stated.
Outlook for the Market
While the market opened the week on a negative note, analysts believe that corporate earnings announcements, dividend expectations, and market corrections could drive renewed investor participation in the coming sessions.
However, uncertainty surrounding interest rates and liquidity flow in the fixed-income space may continue to influence short-term market movements.
As investors monitor developments in bond auctions and full-year earnings reports, market participants will be keen to see whether positive corporate results can counterbalance the impact of external economic pressures on equities.
