Mixed Sentiment As Equities Market Undergoes Correction

Analysts have anticipated continued mixed sentiment as the Nigerian equities market undergoes corrections this week.

Last week, the equities market recorded another decline for the third consecutive week, reaching a four-week low as bearish sentiment triggered selling pressure and profit-taking. This reflects portfolio rebalancing amidst bargain hunting and anticipation of further corporate earnings reports.

Analysts Optimisms

Analysts at Cowry Assets Management Limited said “we note that the continued challenges faced by the local equities market week-on-week as global market trends exert pressure in a mixed fashion. The imposition of tariffs by former United States President Donald Trump on imports from China, Mexico, Canada, and the European Union contributed to volatile investor sentiment.”

Looking ahead, the research firm anticipated continued mixed sentiment as the market undergoes corrections, placing the exchange in an overbought region, saying that “profit-taking, portfolio reshuffling, and bargain hunting are likely to persist as investors digest corporate actions and Q1 earnings forecasts.

“Additionally, the release of the Consumer Price Index (CPI) report for February 2025 will be a key driver of market direction, as investors assess its implications for their portfolios. However, the current position shows the index remains below the T-line and is approaching a breakdown of the 50-EMA and 50-SMA moving averages, indicating relative weakness amid evolving market fundamentals on the NGX and broader economy. Given these dynamics, we continue to advise investors to focus on stocks with strong fundamentals,” he pointed out.

On market outlook, the chief operating officer of InvestData Consulting Limited, Ambrose Omordion said “we expect mixed sentiments to continue on profit taking, portfolio reshuffling and bargain hunting and digesting of corporate action/Q1 earnings forecast, as more earnings are expected to hit the market with dividend announcement.

“Also, sector rotation and portfolio rebalancing continued in the market with investors taking advantage of price correction to buy into value.”

He noted, this is amid the volatility and pullbacks that add more strength to upside potential, advising investors to take advantage of price correction.

Last Week’s Trading Activities

The equities market closed the week on a bearish note, as the All-Share Index (ASI) declined by 0.55 per cent week-on-week to close at 105,955.13 points. Similarly, the overall market capitalisation lost N365 billion to close the week at N66.352 trillion.

Sectoral performance was mixed as the NGX Insurance index led the gainers, rising by 0.89 per cent week-on-week. The NGX Consumer Goods index followed with a weekly gain of 0.03 per cent, while NGX Commodity index rose by 0.02 per cent W-o-W. Conversely, the NGX Oil & Gas index led the laggards with a weekly loss of 1.15 per cent.

The NGX Banking index recorded a weekly loss of 0.45 per cent, while NGX Industrial index shed 0.21 per cent W-o-W.

Also, market breadth for the week was negative as 38 equities appreciated in price, 46 equities depreciated in price, while 66 equities remained unchanged. Livestock Feeds led the gainers table by 22.16 per cent to close at N10.20, per share. Caverton Offshore Support Group followed with a gain of 15.38 per cent to close at N3.00, while FTN Cocoa Processors went up by 14.20 per cent to close to N1.85, per share.

On the other side, Neimeth International Pharmaceuticals led the decliners table by 17.00 per cent to close at N2.49, per share. MeCure Industries followed with a loss of 10.36 per cent to close at N11.25, while International Energy Insurance declined by 10.26 per cent to close at N1.75, per share.

Overall, a total turnover of 3.281 billion shares worth N63.517 billion in 60,782 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 1.818 billion shares valued at N47.226 billion that exchanged hands previous week in 64,222 deals.

The Financial Services Industry (measured by volume) led the activity chart with 2.302 billion shares valued at N25.014 billion traded in 27,625 deals; contributing 70.17 per cent and 39.38 per cent to the total equity turnover volume and value respectively. The Consumer Goods industry followed with 421.846 million shares worth N3.796 billion in 6,149 deals, while the Services Industry traded a turnover of 228.075 million shares worth N800.274 million in 4,741 deals.

Trading in the top equities; Sovereign Trust Insurance, Champion Breweries and Jaiz Bank (measured by volume) accounted for 1.621 billion shares worth N3.244 billion in 1,528 deals, contributing 49.42 per cent and 5.11 per cent to the total equity turnover volume and value respectively.