NGX down 0.94% as bearish sentiment dampens market performance

Onome Amuge

The Nigerian equities market experienced a downward trend over the past week, with increasing volatility pushing stock prices lower. As a result, the All Share Index (AXI) witnessed a consecutive weekly decline, posting a 0.94 percent drop to close the week at 104,962.96 points.

The recent decline in the Nigerian equities market persisted, driven by investors’ cautious reactions to evolving global economic conditions despite the recent release of the February 2025 CPI report, which showed a second consecutive month of declining inflation.

Despite the positive macroeconomic developments, investor sentiment remained bearish, leading to an extended sell-off across various sectors of the market.

The sell-off across various sectors led to a corresponding decline in the total market capitalisation of listed equities on the Nigerian  Exchange (NGX), falling by 0.80 percent week-on-week to close at N65.82 trillion, representing a N532.17 billion loss in market value.

Bears continued to assert their dominance in the Nigerian stock market, placing pressure on share prices and contributing to a further weakening of the year-to-date return on the NSE All-Share Index, which moderated to 1.98 percent.

The prevailing negative market breadth and weak internal fundamentals eroded investor confidence, which, combined with the ongoing sell-off and declining share prices, reinforced a cautious and risk-averse approach among market participants.

Market breadth remained negative, with a value of 0.68 times, indicating that bearish sentiment continued to dominate market activity. During the trading week, only 32 stocks managed to record gains, while 47 stocks declined in value, highlighting the enduring sell pressure across the board and underscoring the difficulty for investors in finding stocks with upside potential amid the overall market downturn.

The trading activity on the NGX witnessed a further decline, as the total number of transactions fell by 6.15 percent to 57,043 deals on a week-on-week basis. The decline was accompanied by a corresponding reduction in the volume and value of stocks traded, with total weekly volume contracting by 11.55 percent to 2.90 billion units and the total market value of traded securities dropping by 24.33 percent to N48.06 billion.

The bearish sentiment that pervaded the overall market was also reflected in the sectoral performance, with five out of six major sectoral indices declining on a week-on-week basis. However, the NGX Consumer Goods Index managed to buck the negative trend, recording a marginal increase of 0.06 percent.

Driving this positive performance were upward price movements in consumer goods stocks such as Neimeth, NNFM, NASCON, and Dangote Sugar, which benefited from renewed investor interest.

The NGX Industrial Index  suffered the most losses of the week, sliding by 3.39 percent as a result of significant price depreciations in key stocks, including BUA Cement, UPDCREIT, and Cutix Plc, which were heavily sold by market participants. The heavy selling pressure on these stocks contributed to the broad-based decline in the industrial sector.

The bearish sentiment extended to the Insurance and Banking indices, with the NGX Insurance Index declining by 2.87 percent, while the NGX Banking Index shed 2.55 percent during the week.

Insurance stocks such as Universal Insurance and Sovereign Trust Insurance, along with banking stocks like FCMB Group, First Bank Holdings, and AccessCorp, witnessed heavy selling pressure, as investors offloaded their positions to rebalance their portfolios and reevaluate the impact of declining inflation on financial sector stocks.

The losses continued to mount as both the NGX Oil & Gas Index and the NGX Commodity Index dipped by 1.08 percent and 0.45 percent, respectively.

In the oil and gas sector, sell-offs in major oil producers weighed heavily on the index, as investors adopted a cautious stance amid ongoing political and economic developments affecting oil-rich regions in the country.

Amidst the prevailing bearish sentiment, a select few stocks managed to buck the trend and deliver positive returns to investors. Neimeth International Pharmaceuticals emerged as the top-performing stock of the week, posting a 20.5 percent increase in share price, closely followed by Linkage Assurance, which saw a 13.5 percent rise.

Other notable performers included NNFM with a 10 percent gain, Academy Press with a 9.9 percent uptick, and Mutual Benefits Assurance (MBENEFIT) which gained 9.8 percent.

On the flipside, several stocks recorded significant losses during the week, as investors exited their positions in an attempt to limit further losses. ETranzact International emerged as the worst performer, with its share price plunging 26.2 percent, followed closely by Livestock Feeds, which recorded a 17.5 percent decline.

Other notable underperformers included Red Star Express, which lost 16.9 percent, Universal Insurance, which suffered a 13.3 percent fall, and Caverton Offshore Support Group, which dropped by 13 percent.

Commenting on the ongoing bearish trend in the Nigerian stock market, analysts at Cowry Research noted that the current market conditions indicate an oversold situation, suggesting that the market might be undervalued and present an attractive entry point for astute investors.

According to Cowry Research, the market sell-off, coupled with the sustained negative investor sentiment, has pushed prices to levels that are potentially undervalued and represent an opportunity to buy underpriced securities that are poised for a rebound.

“The ongoing pullback has created an environment where dividend-paying stocks are becoming increasingly attractive, as their yields are likely to improve in response to the recent price corrections.

“As the market enters the final trading week of March and concludes the first quarter of 2025, many investors may begin repositioning their portfolios to take advantage of dividend season, which typically offers prospects for capital appreciation and income generation,” they stated.

market analysts anticipate that investors will remain focused on analyzing corporate earnings reports and evaluating broader macroeconomic trends, in order to better anticipate future market movements and adjust their portfolios accordingly.

As the Nigerian equities market undergoes the current wave of volatility, its trajectory is expected to be heavily influenced by the performance of global financial markets, the monetary policy decisions of the Central Bank of Nigeria (CBN), and investor sentiment surrounding Nigeria’s economic prospects.

In light of these dynamics, investors are encouraged to prioritise stocks with solid fundamentals.

In the money market this week, rates closed on a mixed note as liquidity in the financial system further deteriorated beyond N1.7 trillion due to the absence of significant inflows to ease the prolonged liquidity crunch. This ongoing strain continued to impact market dynamics. As a result, the Overnight NIBOR rose marginally by 0.07 percentage points to close at 32.90 percent, reflecting the persistent thinning of system liquidity. Meanwhile, the 1-month, 3-month, and 6-month NIBOR rates declined as banks renegotiated funding obligations. The Nigerian Interbank Treasury Bills True Yield (NITTY) trended upwards as investors sought higher returns on their investments. Market sentiment remained strong following robust demand and high subscription levels at this week’s Nigerian Treasury Bills (NTB) auction. This was accompanied by an upward movement in stop rates and expectations for the forthcoming Primary Market Auction (PMA) by the CBN.