The Nigerian Exchange Limited (NGX) experienced a notable downturn last week, with the benchmark index that track aggregate share price movement, the All-Share Index (ASI), falling by 2.94% week on week to close at 102,353.68 basis points.
The decline was primarily driven by widespread sell-offs across most sectors, with the exception of the consumer goods space where prices defied the bear pressure.
Market sentiment throughout the week remained mixed, with both buying and selling activities taking place, reflecting the uncertainty investors are currently grappling with.
This period of volatility was spurred by portfolio realignment, as market participants reassessed their positions in light of the latest macroeconomic data, particularly the consumer price inflation report for December 2024, which showed inflation at a concerning 34.80%, according to the National Bureau of Statistics (NBS).
As a result of the sell-offs, the market capitalization of listed equities saw a 2.26% decrease, amounting to a loss of N1.45 trillion, bringing the total market value down to N62.851 trillion.
Also, trading activity during the week was notably weak, as evidenced by a significant 41.4% drop in the weekly traded volume, which fell to 2.25 billion units.
The traded value also saw a decline of 18.1%, totaling N58.83 billion. A total of 63,650 trades were executed during the week, further indicating subdued market participation.
Sectoral performance for the week was lackluster, with four out of the five sectors tracked by Cowry Assets Reaserch, a leading investment house, closing in negative territory.
Specifically, the NGX-Consumer Goods index was the only exception, posting a positive gain of 1.33% week on week. Market experts ascribe this to investor interest in major stocks such as NNFM, NEIMETH, DANGSUGAR, and NASCON.
On the contrary, the NGX-Industrial and NGX-Insurance sectors suffered the steepest declines, losing 8.20% and 6.23% week on week, respectively.
The downturn in these sectors was primarily due to sell-offs in the shares of key bellwethers such as DANCEM, JULIUS BERGER, UNIVINSURE, and SOVRENINS.
The NGX-Oil & Gas and NGX-Banking sectors also experienced losses, though to a lesser extent, with declines of 0.78% and 0.46% week on week, respectively. This was attributed to negative price movements in stocks like ARADEL, MRS, FBNH, and WEMABANK.
The week saw notable movements in specific stocks. On the positive side, stocks such as NEIMETH, SCOA, NNFM, LIVESTOCK, and DANGSUGAR attracted significant attention from investors, registering impressive gains of up to 31.4%, 20.4%, 19.5%, 17.6%, and 16.7%, respectively.
On the other hand, there were significant losses in stocks like UNIVINSURE, ROYALEX, REGALINS, SOVRENINS, and DANGCEM, which saw declines of up to 19.2%, 18.3%, 17.8%, 16.7%, and 16.5%, respectively.
Looking forward, dealers anticipated that the market may experience a mixed performance in the coming week.
While some degree of bargain hunting is expected as investors search for attractive entry points, much of the direction will be shaped by the anticipated earnings reports and the broader macroeconomic outlook.
Despite the challenges presented by the week’s market pullbacks, which were largely driven by profit-taking and sell-offs, there may be buying opportunities for discerning investors.
These opportunities are especially apparent for those who are looking to capitalize on low valuations and market volatility ahead of the upcoming Q4 earnings season.
The combination of mixed macroeconomic data and a series of anticipated economic events, such as the upcoming Monetary Policy Committee (MPC) meeting, is likely to continue influencing market dynamics.
In this environment, it is crucial for investors to focus on stocks with strong fundamentals, as these are more likely to weather the current economic challenges and offer better long-term prospects.
