Global tension and uncertainties have continued to fuel negative sentiments on the equities sector of the Nigerian Exchange Limited (NGX) as the market tumbled for the third consecutive week, causing investors’ wealth to dip further by N365 billion.
Last week, the benchmark index declined by 0.5 per cent week-on-week to 105,955.13 points, marking a four-week low. The market capitalisation also declined by 0.6 per cent to N66.35 trillion, wiping out N365.4 billion in investor value over the week.
This decline was driven by portfolio rebalancing, sell pressure, profit taking and investor anticipation of further corporate earnings reports.
As a result, the year-to-date return on the index moderated to 2.9 per cent. Despite these losses, trading activity remained robust, with weekly trading volume surging by 80.5 per cent to 3.3 billion units as investors sought opportunities in penny stocks with strong fundamentals.
The weekly traded value also rose by 34.5 per cent to N63.52 billion, though the total number of deals dipped by 5.4 per cent to 60,782 deals.
On the sectoral performance, three sectors recorded gains while the other three ended in the red. The NGX insurance index led the gainers, rising by 0.9 per cent week-on-week, driven by price increases in Royalex, Cornerstone and Linkage Assurance.
The NGX consumer goods and NGX commodity indices also posted marginal gains of 0.03 per cent and 0.02 per cent, respectively, supported by increases in Livestock, FTN cocoa, International Breweries, and Okomuoil.
On the downside, the NGX oil & gas index led the losers, shedding 1.2 per cent due to sell-offs in Conoil, Oando and Total. The NGX banking and NGX industrial indices also recorded losses of 0.5 per cent and 0.2 per cent, respectively, as investors reduced their holdings in Berger paints, Jaiz Bank, RT Briscoe, UBA and First Holdco.
Analysts at Cowry Asset Management Limited attributed the negative sentiments to global market trends.
According to them, the lingering effects of trade tariffs imposed by U.S. President Donald Trump on imports from China, Mexico, Canada, and the European Union have contributed to volatile investor sentiment.
Looking ahead, the analysts expect market corrections to persist as the exchange enters an overbought region.
Profit-taking, portfolio reshuffling, and bargain-hunting will likely continue, with investors closely monitoring corporate actions and first-quarter earnings forecasts.
A key market driver in the coming weeks will be the release of the February 2025 Consumer Price Index (CPI), which will provide critical insights into inflation trends and their impact on investment decisions.
These trends reflect underlying vulnerabilities in the NGX and the broader economy. Given these uncertainties, Cowry Research advises investors to focus on stocks with strong fundamentals to navigate the evolving market landscape.
Cordros Capital anticipates that market sentiment in the coming week will be influenced by investor reactions to the February inflation report and movements in fixed-income yields.
While uncertainties persist, the firm noted that recent selloffs in the banking sector have created compelling re-entry opportunities, which could drive bargain-hunting activity among investors seeking undervalued stocks.
“Looking ahead, we expect market sentiment to be shaped by investors’ reactions to the February inflation report expected next week and the direction of yields in the fixed-income market.
“However, we do not rule out potential bargain-hunting in some banking names, as recent selloffs suggest attractive re-entry opportunities.”
