Analysts Urge Focus On Fundamentals Amid Equities Market Weakness

As volatility persists in the Nigerian equities market, analysts have urged investors to trade cautiously and target stocks with solid fundamentals and compelling valuations.

The advice comes amid sustained sell-offs that have eroded market capitalisation, with market players prioritising earnings strength and dividend yield over speculative plays in the near term.

Speaking on the market outlook, Futureview Group stated that, “We expect investors to trade cautiously, focusing on fundamentally sound stocks with attractive valuations.”

Cowry Assets Management Limited pointed out that, “We expect the Nigerian equities market to remain broadly cautious in the near term as investors continue to assess prevailing macroeconomic conditions and recent market gains.

“Profit-taking may persist in stocks that have recorded strong year-to-date returns, while bargain hunting is likely to emerge in fundamentally sound counters with attractive valuations. Consequently, market performance is expected to remain mixed, with stock-specific opportunities continuing to drive investor activity.”

Meanwhile, the Nigerian equities market ended last week on a bearish note as sustained selling pressure across major counters dampened investor sentiment.

The benchmark NGX All-Share Index (ASI) declined by 1.65 per cent week-on-week to close at 232,049.02 points, while market capitalisation shed N2.422 trillion to close the week at N148.905 trillion. As a result, the market’s year-to-date return moderated to 49.12 per cent, reflecting a more cautious investment outlook amid continued profit-taking.

Market breadth remained firmly in negative territory, with 19 gainers compared with 59 losers. This indicates that losses were widespread across the market, highlighting weak investor appetite and broad-based declines in share prices.

International Energy Insurance led the gainers’ table, rising by 36.5 per cent to close at N6.43 per share. McNichols followed with a gain of 19.9 per cent to close at N8.15 per share, while Airtel Africa advanced by 10 per cent to close at N4,358.80 per share.

On the other side, Trans-Nationwide Express led the decliners’ table, falling by 23.8 per cent to close at N3.64 per share. Academy Press followed with a loss of 17.3 per cent to close at N6.70 per share, while Consolidated Hallmark Insurance declined by 16.2 per cent to close at N6.10 per share.

Overall, a total turnover of 2.324 billion shares worth N134.486 billion in 249,328 deals was traded last week by investors on the floor of the Exchange, compared with a total of 3.075 billion shares valued at N254.614 billion exchanged in the previous week across 287,157 deals.

The Financial Services Industry led the activity chart, with 1.523 billion shares valued at N47.542 billion traded in 105,230 deals, contributing 65.53 per cent and 35.35 per cent to the total equity turnover volume and value, respectively. The ICT Industry followed with 198.821 million shares worth N32.622 billion in 29,905 deals, while the Consumer Goods Industry recorded a turnover of 151.635 million shares worth N10.933 billion in 23,951 deals.

Trading in the top equities, Access Holdings, Fidelity Bank, and Chams Holding Company accounted for 485.749 million shares worth N7.656 billion in 17,843 deals, contributing 20.90 per cent and 5.69 per cent to the total equity turnover volume and value, respectively.