Nigeria’s Equity Market Declines By 0.11% As Investors Remain Cautious

Nigeria’s equity market started the week with a slight drop, reflecting cautious sentiment among investors. The Nigerian Exchange Limited (NGX) All-Share Index (ASI) fell by 0.11%, moving from 98,210.75 points to 98,107.52 points. Similarly, the equities market capitalisation declined from N59.534 trillion to N59.471 trillion.

Market activity was also evident in the number of deals and volume of shares exchanged. Investors traded 436,039,692 shares worth N12.864 billion in 9,489 deals.

Analysts Anticipate a Week of Cautious Trading

Market analysts believe the equity market will experience a mix of profit-taking and bargain-hunting. A report from Vetiva analysts suggested that investors would maintain a cautious outlook as interest rates in the secondary market remain elevated. They noted, “We anticipate a mixed start to the week, as investors retain a cautious outlook amid higher interest rates in the secondary market.”

The report highlighted the influence of the fixed-income market on stock market performance, with some investors opting for the relative security of fixed-income assets.

Top Gainers and Losers in the Equity Market

While some stocks saw gains, others recorded losses. Golden Guinea Breweries was the top performer, with its share price rising from N5.40 to N5.94, reflecting a 10% increase. On the other hand, RTBriscoe experienced the biggest loss of the day, as its share price declined from N2.45 to N2.30, a loss of 6.12%.

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Other actively traded stocks included major players like FCMB Group, Access Holdings, UBA, GTCO, and Fidelity Bank. Their trading volumes and price movements played a significant role in shaping the market’s overall performance.

Profit-Taking Likely to Impact the Equity Market

Futureview analysts forecast a mildly negative close for the week. Their latest report stated that some investors might sell off profitable stocks as part of ongoing portfolio rebalancing. “We anticipate a mildly negative close to the week as investors take profits from high-performing stocks ahead of the upcoming fixed-income auction and ongoing portfolio rebalancing,” analysts from Futureview stated.

This view aligns with observations that traders may shift focus from equities to fixed-income assets, especially as auction dates for government securities approach.

Equity Market Outlook for the Week

While the equity market’s early decline suggests caution, analysts at Meristem expect some market recovery. They emphasised that the end of the year often brings heightened bargain-hunting activity as portfolio managers reposition their holdings.

“We anticipate the market to close on a positive note, driven by heightened bargain-hunting activity as investors, particularly portfolio managers, seek to realign their portfolios as the year-end approaches,” Meristem analysts said in their report.

The analysts also highlighted the positive momentum from the previous week, pointing to a significant improvement in market breadth. According to their report, the market breadth expanded by 150.95% on a week-on-week (WoW) basis, moving from 0.64x to 1.61x. They believe this momentum may support a positive close for the week.

However, they cautioned that profit-taking could weigh on the equity market as investors cash in on stocks that have seen recent price increases. Meristem analysts explained, “Nonetheless, we acknowledge the potential for profit-taking activities on tickers that have rallied in recent weeks. Overall, we project that the local bourse should end the week in the positive territory.”

The equity market’s mixed start this week highlights the cautious sentiment among investors. While the NGX All-Share Index saw a slight dip, market analysts believe that increased bargain-hunting could support a recovery before the week ends. The interplay between profit-taking and year-end portfolio adjustments will likely shape the equity market’s direction in the coming days.