Maha Christopher
Investors on the Nigerian Exchange Limited suffered losses of more than N4.9 trillion last week as the stock market reversed its recent upward trend amid widespread profit taking across major sectors.
According to Vanguard, the market capitalisation of listed equities declined by N4.915 trillion, falling to N155.593 trillion on Friday from N160.508 trillion recorded the previous week.
The downturn was driven by sustained sell offs as investors moved to lock in gains following months of strong market performance.
Similarly, the NGX All Share Index, which tracks the overall movement of share prices, dropped by 3.1 per cent to close at 242,593.31 points, down from 250,385.47 points recorded a week earlier.
Market analysts attributed the decline to portfolio rebalancing, concerns over stock valuations after the market’s prolonged rally, and cautious positioning by investors seeking to preserve profits.
Trading activity during the week reflected negative sentiment across key sectors, with sellers dominating transactions in banking, oil and gas, industrial goods, consumer goods and insurance stocks.
Among the major contributors to the decline were FirstHoldco, which fell by 11.4 per cent, BUA Cement by 10 per cent, Aradel Holdings by 9.5 per cent, MTN Nigeria by 5.5 per cent and WAPCO by 3.5 per cent.
Despite the losses, the market’s Month to Date return remained positive at 0.5 per cent, while the Year to Date return stood at 56.4 per cent.
Trading activity improved significantly during the week, with transaction volume rising by 71.7 per cent and transaction value increasing by 67.9 per cent compared to the previous week.
Sectoral performance was broadly negative, as the Oil and Gas Index declined by 5.2 per cent, the Industrial Goods Index by 4.4 per cent, the Banking Index by 3.4 per cent, the Insurance Index by 1.9 per cent and the Consumer Goods Index by 0.7 per cent.
Commenting on the outlook, analysts at InvestData Consulting Limited said the market could witness mixed sentiment in the near term as bargain hunting competes with ongoing profit taking.
“While short term volatility may persist, the medium to long term outlook remains positive, supported by strong corporate fundamentals, improving economic conditions and growing investor confidence in the domestic market,” the firm stated.
The analysts advised investors to focus on fundamentally strong companies with resilient earnings, attractive valuations and strong dividend potential.
Also commenting on the market outlook, analysts at Cordros Capital said they expect trading activity to remain cautious and largely range bound in the near term due to the absence of strong catalysts capable of driving significant buying interest.
