Investors sell shares, market value drops by N964bn

By Chukwuma Umeorah

Nigeria’s stock market closed October on a downward note, with investors losing about N963.94 billion last week as many sold shares to take profits and adjust their portfolios.

The downturn halted the sustained bullish run in previous weeks, as mixed third-quarter earnings reports from the banking sector dampened investor optimism.

According to data from the Nigerian Exchange Limited (NGX), the All-Share Index (ASI) fell by 0.98 per cent week-on-week to close at 154,126.46 points, down from 155,645.05 points the previous week. Consequently, market capitalization dipped from N98.79 trillion to N97.83 trillion. This negative sentiment reflected across most major indices, with only a handful recording marginal gains.

Analysts at Cowry Asset Management noted that the pullback was largely driven by profit-taking and portfolio realignment following weeks of strong rallies across key sectors. “The NGX trades within a corrective corridor for the short term, with the All-Share Index hovering below its 20-day and 50-day moving averages, which reinforces short-term bearish momentum,” the report stated. It added that “the Relative Strength Index (RSI) is inching toward the oversold region, hinting that some fundamentally strong, large-cap names may soon present attractive re-entry opportunities for medium-term investors.”

Investor activity, however, remained relatively strong despite the general market weakness. The NGX reported a total turnover of 7.479 billion shares valued at N145.429 billion in 159,487 deals, a significant increase compared to 3.695 billion shares worth N129.889 billion traded the previous week in 148,077 deals. The Financial Services sector led activity by volume, contributing 88.77 per cent and 51.32 per cent to total equity turnover volume and value respectively.

Trading was particularly heavy in Cornerstone Insurance Plc, Wema Bank Plc, and Guaranty Trust Holding Company Plc, which jointly accounted for 70.43 per cent of the total equity turnover volume and 33.67 per cent of total value traded.

Sectoral performance was largely negative. The Banking Index dropped by 2.11 per cent, the Insurance Index fell 3.47 per cent, while the Consumer Goods Index lost 2.73 per cent. The Industrial Goods Index was down 1.02 per cent, reflecting sell pressure in bellwether counters such as Dangote Cement Plc, Lafarge Africa Plc, and BUA Cement Plc. In contrast, the Oil and Gas (+0.30 per cent) and Commodity (+0.15 per cent) indices managed to close higher, buoyed by gains in Oando Plc and Okomu Oil Palm Plc as investors sought refuge in select energy and commodity stocks.

The market breadth remained weak, closing negative at 0.41x, as 29 stocks advanced while 70 declined, and 47 remained unchanged. Top gainers for the week included ASO Savings (+56.1 per cent), Julius Berger (+13.3 per cent), Oando (+11.9 per cent), Berger Paints (+9.3 per cent), and ETI (+8.2 per cent).

On the other hand, the stock value of Omatek declined by – 21.9 per cent, John Holt (-16.9 per cent), Caverton (-16.2 per cent), NAHCO (-15.9 per cent), and eTranzact (-15.3 per cent) led the losers’ chart.

These analysts maintained that market sentiment was further influenced by weak third-quarter corporate earnings and renewed attraction to fixed-income instruments following an uptick in yields. “The market needs a strong catalyst, possibly in the form of improved macro indicators or stronger-than-expected corporate results to reignite a bullish spark and restore positive sentiment on the NGX.”

Despite the bearish close, the sharp rise in trading volume suggests that investors were not exiting the market outright but rotating funds within asset classes. The increase in deals to 159,487 from 148,077 the previous week supports this observation, pointing to selective positioning by investors ahead of new corporate disclosures in November.

Cowry forecasts that, going forward, the market may experience a mixed performance in the near term, shaped largely by investor reactions to fixed-income yields, liquidity movements.