Nigeria’s Equity Market Sees Another Drop By 0.01% As Investors Await Fresh Catalysts

Equity Market Declines by 0.01% Amid Investor Caution

The Nigerian equity market faced a minor setback on Thursday, dipping by 0.01%, equating to a N6 billion reduction in market capitalisation.

Investors mostly sold banking, consumer goods, and oil stocks, contributing to this downward movement. This decline marks a broader trend, with the market decreasing by 0.04% this week and by 1.10% this month.

Market experts noted that the equity market has shifted into negative territory, largely due to cautious trading by investors who are taking a short-term view. “Investors are being careful, particularly as there aren’t any strong market catalysts driving aggressive buying,” said a market analyst from Meristem Research. “The equity market will likely continue to see modest trading volumes until new opportunities emerge.”

Muted Trading Activity in Equity Market

The All-Share Index (ASI) of the Nigerian Exchange Limited (NGX) slightly declined, moving from 97,487.14 points to 97,477.19 points. Similarly, the equity market capitalization fell from N56.019 trillion to N56.013 trillion. Analysts have expressed concern about the lack of significant developments that could trigger robust market activity.

“While we may see some investors position ahead of the nine-month earnings reports for 2024, we don’t expect any major surprises. Many of these reports will likely align with trends from the half-year results,” added another analyst. “Investors are playing it safe, awaiting market catalysts or more attractive opportunities.”

As of now, the market’s return year-to-date stands at +30.36%, a positive figure, but momentum has clearly slowed in recent weeks.

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Banking Stocks Lead Equity Market Activity

Despite the market’s overall decline, several stocks saw high trading activity on Thursday. Fidelity Bank, UBA, Zenith Bank, Lasaco, and Access Holdings emerged as the most actively traded stocks, with over 277 million shares worth N4.65 billion exchanged in 7,091 deals.

According to a trader, “The equity market saw a lot of interest in the banking sector today, but overall investor sentiment remains cautious.” Traders attribute the market’s current trend to increasing risk aversion among investors.

Equity Market: Key Laggards

Some stocks experienced significant declines. Among the biggest losers were Sunu Assurances, Livestock Feeds, and Fidson Healthcare. Sunu Assurances dropped from N1.75 to N1.58, losing 9.71%, while Livestock Feeds fell by 9.88%, and Fidson Healthcare declined by 9.71%.

An investor in the market said, “These stocks faced considerable sell pressure as investors are looking for safer options in the equity market. The market’s volatility has led many to focus on more stable, less risky assets.”

Outlook for the Nigerian Market

Looking ahead, market analysts predict that cherry-picking, where investors selectively buy undervalued stocks, could define the equity market’s sentiment in the near future. As more investors become risk-averse, the general outlook suggests a wait-and-see approach, with many waiting for new developments or results from the upcoming earnings reports to inform their decisions.

“We are not likely to see any aggressive moves in the market until there is a strong catalyst,” noted a financial analyst. “For now, cautious trading will remain the norm.”

Investors are advised to continue monitoring market trends and focus on long-term strategies in the market.