Stock market sustains profit taking, as investors lose N2.4trn

By Peter Egwuatu  

The Nigerian stock market has sustained profit taking for second consecutive weeks, as investors lost over N2.4 trillion to price declines.

The investors had lost over N5.6 trillion the previous week following massive selloff in high and mid capitalised stocks.

Market analysts are of the view that the negative close reflects the market’s current phase of consolidation following an impressive rally that has seen the Nigerian Exchange, NGX, deliver one of the strongest performances among global frontier and emerging markets this year. With many stocks still trading around multi-month highs, investors have continued to lock in gains while awaiting fresh catalysts from half-year corporate, earnings, dividend expectations and macroeconomic developments.

Analysis of trading Week-on-Week, WoW, shows that the market capitalisation, which represents the total value of shares listed on the Exchange close at N148.905 trillion from N148.905 trillion the previous week  

Similarly, another major market indicator, the NGX All Share Index, ASI shed 1.7% to close last week at 232,049.02 points from 235.941.27 points the previous week.

Trading sentiment remained weak throughout the week under review as sellers dominated activities in major stocks that have been key drivers of the market’s Year-to-Date, YtD performance. The persistent profit-taking pressure was particularly evident in the oil and gas sector, where investors reacted to declining crude oil prices in the international market. Banking stocks also witnessed renewed selling pressure as traders took profits from recent gains recorded in the sector.

The market decline came despite pockets of bargain hunting in a number of low- and medium-priced stocks, highlighting the selective nature of investment decisions in the current environment.  

Reacting to the market performance, analysts at InvestData Consulting Limited stated that despite the recent pullback, the broader market structure remains bullish. The Index continues to trade above key medium-term support levels, while its year-to-date gain of over 50% underscores the strength of the underlying trend.  

Going forward, the analysts said: “Investors are expected to focus on stocks with strong earnings growth potential, attractive dividend yields and resilient business fundamentals. Market sentiment is also likely to be influenced by developments in the fixed-income market, foreign exchange stability, crude oil price movements and upcoming corporate results. Portfolio rebalancing activities by institutional investors could further drive trading patterns in the weeks ahead.”

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