Onome Amuge
The Nigerian equity market closed another week in negative territory. The benchmark NGX All-Share Index (ASI) retreated 0.94 per cent week on week, closing at 138,980.01 points compared with 140,295.49 points the previous week. Market capitalisation slipped by N832 billion to N87.94 trillion, trimming year-to-date gains to 35.03 per cent.
The slide marks the latest leg in a steady downtrend that has taken hold since midyear, as foreign and domestic investors alike remain cautious amid persistent pressure on the naira, elevated inflation expectations and uncertainty around monetary policy direction.
Trading activity pointed to weakening participation. Total deals contracted 17.4 per cent to 117,791, while aggregate traded volume fell 2.7 per cent to 3.11 billion units. Turnover, however, defied the slowdown, rising 5.5 per cent to N90.2 billion. Analysts said the divergence suggested thinning liquidity in the broader market but continued appetite for select high-value counters, particularly in the banking and industrial segments.
Market breadth stayed weak at 0.30x, with only 19 gainers against 63 decliners. The imbalance highlighted the depth of bearish positioning across the bourse, leaving little room for broad-based rallies.
Sector indices largely mirrored the broad market weakness. The Industrial Goods Index fell 2.08 per cent, dragged by sell-offs in mid- to large-cap names. Banking stocks slipped 1.52 per cent as liquidity constraints and high funding costs tempered investor appetite for financials.
Consumer Goods shares shed 1.18 per cent, Oil & Gas declined 0.77 per cent, and Insurance dipped 0.36 per cent, underscoring the breadth of negative sentiment. The lone gainer was the Commodity Index, which eked out a marginal 0.04 per cent rise, insufficient to alter the overall bearish tone.
At the individual stock level, performance was split between a handful of outliers and a broad swathe of decliners. SOVRENINS gained 14.2 per cent, while NSLTECH added 12.9 per cent, CORNEST 12.4 per cent, and NCR and SCOA both advanced 10 per cent.
By contrast, DAARCOMM plunged 21.1 per cent, while UPDC, AIICO, CHAMPION and PZ all shed more than 13 per cent each. The divergence underscored investor focus on small- and mid-cap stocks with momentum while large-cap counters faced consistent selling pressure.
Nigeria’s equities market has posted respectable gains so far in 2024, with the NGX ASI still up more than a third year to date. But analysts caution that sustaining momentum will prove difficult without clarity on inflation, currency stability and monetary policy.
Headline inflation remains stubbornly high, eroding real returns and weighing on consumer demand. The naira has experienced bouts of volatility, raising concerns among foreign portfolio investors over repatriation risks. Meanwhile, the Central Bank of Nigeria’s policy direction remains a source of uncertainty, with investors watching closely for signs of either further tightening or easing.
Looking ahead, analysts at Cowry Asset expect the market to remain fragile. Bargain-hunting in oversold stocks may spark intermittent rebounds, but the broader tone is likely to stay cautious.
“We see some potential for selective buying, particularly in stocks with strong fundamentals and resilient earnings profiles. But overall, the weight of macro risks suggests that the bearish bias will persist,” the analysts stated.
Investors are advised to focus on companies with healthy balance sheets, defensive business models and the ability to navigate high-cost environments.
