Sell-offs in Nigerian stocks persist in 6th consecutive sessions as benchmark index dip 0.46%

A raft of sell-offs in Nigerian stocks persisted Wednesday, dragging benchmark index, the NSEASI, lower by 46 basis points to 41,496.25 points while YTD gain contracted to 8.5 percent. Consequently, market capitalization decreased by N68.6 billion to N14.8 trillion.

The day’s negative performance was largely driven by sell pressures in NESTLE (-2.2%), STANBIC (-4.5%) and WAPCO (-6.6%).

However, market activity improved as volume and value traded inched 22.7 percent and 44.4 percent higher to 488.7 million units and N5.6 billion respectively.

AFRINSURE (82.8m), JAPAUL OIL (75.6m) and FIDELITY (63.9m) were the top traded stocks by volume while DANGCEM (N1.1tn), GUARANTY (N886.6m) and NIGERIAN BREWERIES (N867.7m) led the top traded stocks by value.

Sector performance was largely bearish as three indices closed in the red, one positive while the other flat. The industrial goods index led losers, down 2.5 percent following price depreciation in WAPCO (-6.6%).

The insurance index followed suit, falling 1.9 percent as MANSARD (-7.4%) and UNITYKAP (-7.7%) recorded losses. The consumer goods index also declined, shedding 0.7 percent largely due to profit taking in NESTLE (-2.2%), NIGERIAN BREWERIES (-0.9%) and PZ (-4.9%).

On the flip side, the banking index gained 0.1 percent as investors took position in UBA (+4.1%), ZENITH (+1.1%) and GUARANTY (+0.3%). while the Oil & Gas index, however, closed the day flat.

Investor sentiment measured by market breadth improved to 0.6x from 0.5x recorded the previous day as 18 stocks advanced against 33 that declined. The best performing stocks on the day were FIDELITY (+7.8%), GLAXOSMITH (+5.0%) and DANGFLOUR (+5.0%) while CADBURY (-9.6%), UNITYKAP (-9.4%) and MANSARD (-7.4%) were the worst performers.

The sell-offs experienced in the local bourse so far can largely be attributed to profit taking in stocks that had rallied significantly before the beginning of the earnings season as well as contagion effect of the rout in equities across global markets, according to analysts at Afrinvest.

“With investors sceptical of forward earnings vis-à-vis elevated valuations, sentiment has turned bearish in recent trading sessions. We believe declining level of valuation has presented investors with attractive entry opportunity; hence, we expect a reversal of the bearish trend in the near term,” they noted.