by Akpobor Jirue, Lagos
Equity investment in the Nigerian Exchange Limited (NGX) witnessed southward trend last week as profit-taking activities and sell-offs dominated the market, as bulk of mid and large-cap stocks shed weight due to the reason stated. This downturn further depressed the benchmark index, with high trading volumes and negative market internals highlighting both the market’s weakness. This trend unfolded as market participants continue to react to the positive outcome of the last treasury bills and FGN bonds auctions which recorded healthy investors’ subscription.
By the end of the trading week, bearish sentiment firmly held its grip on the All-Share Index (ASI), which fell by 1.16% on a week[1]on-week basis, closing at 95,973.45 points. This decline was primarily driven by pressured sell-offs in the consumer goods and industrial goods sectors, a reflection of the ongoing interplay of market dynamics amidst heightened volatility. Additionally, the market capitalisation saw a corresponding decreased marginally week-on-week, dropping to N55.13 trillion, with a total of N2.45 billion being wiped off from the market. As a result, the year-to-date (YTD) return for the market now stands at 28.35%.
Trading activities throughout the week were notably mixed, with a lacklustre market sentiment prevailing. The weekly traded volume advanced by 183.6% week-on-week to 5.64 billion units, while the weekly traded value declined by 17.78% to N33.05 billion and then the number of weekly deals fell by 4.60%, amounting to 4,993 trades. This downturn was exacerbated by portfolio realignment in the face of positive market breadth, as evidenced by the fact that the number of gainers (43) was outstripped by the number of losers (36).
In terms of sectoral performance, the picture was largely positive, with the exception of the NGX-Industrial Goods and NGX[1]Consumer goods sectors, which retreated by 4.94% and 1.42% week-on-week respectively, as profit-taking exerted downward pressure on these sectors in the context of ongoing portfolio realignments. In contrast, the market pullbacks witnessed during the week provided strong buying opportunities that buoyed investor sentiment. This positive sentiment was reflected in the performance of certain stocks, leading to gains in the NGX-Oil & Gas (3.54%), NGX-Insurance (1.90%), and NGX-Banking (0.37%) indexes.
As the week drew to a close, specific stocks stood out as top gainers. RTBRISCOE led the chart with a 59% increase, followed by TANTALIZER (55%), OANDO (34%), DEAPCAP (30%), and UCAP (27%), all benefiting from positive price movements during the week. Conversely, stocks such as CUTIX (-37%), DANGCEMENT (-10%), TIP (-10%), THOMASWY (-10%), and BETAGLASS (- 19%) were among the top losers, primarily due to sell-offs by investors.
Reviewing the week’s activities, financial research experts at Cowry Assets Management Limited said, “The NGX index’s current position below the T-line, along with the 50-day Exponential Moving Average (EMA) and 50-day Simple Moving Average (SMA), signals underlying weakness in the market.”
Insisting that, the alignment of technical indicators reflects a broader caution, suggesting that the market is struggling amid evolving fundamentals and technical conditions. “The breach of these key moving averages often points to a potential downtrend, indicating that market sentiment remains bearish for the time being,” they stated in their weekly report.
Drawing inspirations from last week’s activities to forecast for this week, the report noted that, “transaction volume patterns and support levels are signalling further buying opportunities, even as market participants look ahead to the forthcoming release of the Q2 2024 GDP report, along with audited half-year earnings and interim dividend declarations.
“Consequently, Cowry Research anticipates a mixed performance in the coming week, driven by ongoing portfolio rebalancing and profit-taking activities. Nevertheless, we continue to advise investors to focus on fundamentally sound stocks.”