The Nigerian Exchange’s equities market section, NGX, fell, shedding more than N54 billion last week as the local bourse’s gloomy trend continued. As a result of the high yield on borrowing instruments, the market has seen a steady flow of capital into fixed interest securities. As inflation rises, the market expects another interest rate hike, potentially forcing yield repricing in the fixed income market.
The local market had flared early in the year due to purchasing activity, but it subsequently reversed course following a money policy rate modification.
Stockbrokers believe that the market will continue to trade in the same direction until the completion of the money policy committee meeting, as investors anticipate a potential interest rate rise.
According to data obtained from the NGX, the benchmark index fell by 0.11% week-on-week to 98,125.73 points. “This downturn reflects ongoing portfolio rebalancing influenced by first-quarter earnings and the dividend payment season, set against a backdrop of evolving market dynamics and fundamentals”, Cowry Asset said in its market note.
Despite this week’s losses, the year-to-date return for the benchmark index stands at 31.23%, tracking the annual inflation rate of 33.69% in April 2024, the real return remains negative.
Trading activity remained subdued, with a 15.8% decrease in the weekly traded volume, amounting to 1.65 billion units across 38,121 deals—a 24.5% drop from the prior week.
The traded value also fell by 15.8% to N42.7 billion. The market breadth was negative, with 51 stocks declining compared to 28 gainers. Across various sectors, most indices closed in negative territory.
The NGX-Industrial index managed a slight gain of 0.01%, driven by positive price movements in JULIUS BERGER, UPDC, and CUTIX respectively, Cowry Asset told investors in an update.
Conversely, the NGX-Banking index fell by 6.51%, influenced by declines in UBA and GTCO. The NGX-Oil & Gas index decreased by 6.49%, with SEPLAT leading the losses.
The NGX-Insurance index dropped by 3.98%, affected by NEM, while the NGX-Consumer Goods index was down by 1.29%, with PZ, PRESCO and DANGOTE SUGAR contributing to the decline.
Among the top performers of the week, International Energy Insurance led with a 12% increase, followed by MCNICHOLS and CUSTODIAN, both rising by 10%. AIRTELAFRI and TANTALIZER also performed well, each registering a 9% increase.
Cowry Asset stated that the worst performers included PZ Cussons, which saw its share price fall by 22%, NEM Insurance and ETERNA, both dropping by 18%, UBA decreasing by 17%, and The Initiates Plc losing 15%.
Looking ahead, the market is expected to maintain a weak sentiment as investors continue to digest the latest economic data from the statistics bureau, stockbrokers added.
“Despite the current market weakness and mixed sector performance, the oversold conditions and mixed technical indicators suggest potential buying opportunities for value investors aiming to capitalise on low prices and valuations”, Cowry Asset stated.
Overall, the equities market capitalisation dropped by N54.11 billion to N55.51 trillion from N55.56 trillion in the previous week.
