Shareholders see N4.9trn wiped out as stock market rally falters

The Nigerian stock market took a downturn last week, with investors witnessing a loss of over N4.915 trillion in their investments listed on the Nigerian Exchange Limited, NGX, due to sustained profit-taking across major sectors.

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This development led to a decline in the NGX market capitalisation, which represents the total value of stocks listed on the Exchange, to N155.593 trillion on Friday from N160.508 trillion the previous week.

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Analysts attributed the bearish close to a combination of portfolio rebalancing, valuation concerns following the market's remarkable rally, and cautious positioning by investors seeking to preserve gains accumulated over the past several months.

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The NGX All Share, ASI, which reflects the stock prices movement, also experienced a 3.1% decline, closing on Friday at 242,593.31 points from 250,385.47 points the previous week, indicating a largely negative trading sentiment throughout the week.

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Sellers dominated activities across the banking, oil and gas, industrial, consumer goods, and insurance sectors, contributing to the negative trading sentiment.

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Losses in major stocks, including FirstHoldco by -11.4%, BUA Cement by -10.0%, ARADEL by -9.5%, MTNN by -5.5%, and WAPCO by 3.5%, significantly contributed to the decline in the ASI.

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As a result, Month-to-Date, MtD, and Year-to-Date, YtD returns settled at 0.5% and 56.4%, respectively, reflecting the market's performance.

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Market participation showed improvement, with trading volume and value increasing by 71.7% WoW and 67.9% WoW, respectively.

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Sectoral performance was broadly negative, with the Oil & Gas Index declining by -5.2%, Industrial Goods Index by -4.4%, Banking Index by -3.4%, Insurance Index by -1.9%, and Consumer Goods Index by -0.7%.

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Analysts at InvestData Consulting Limited commented that the market is likely to experience mixed sentiment, with bargain hunting competing with continued profit-taking, while the medium-to-long-term outlook remains positive.

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They advised investors to remain selective, focusing on fundamentally strong companies while taking advantage of opportunities created by market weakness.

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Meanwhile, analysts at Cordros Capital expect market activity to remain cautious and largely range-bound in the near term, given the lack of a meaningful catalyst to spur buying interest.