Investors’ Negative Sentiment Drags Stock Market YtD Performance to 28.97%

Kayode Tokede

Investors’ negative sentiment has continued to drag the stock market of the Nigerian Exchange Limited (NGX) downward, as the Year-till-Date performance dropped to 28.97 per cent amid profit-taking in fundamental stocks.

In the first half year of 2024, Nigerian Exchange Limited All-Share Index (NGX ASI) had gained 33.8per cent to closed June 2024 at 100,057.49basis points from 74,773.77 basis points it opened for trading this year but between July and August, 2024, the stock market has depreciated by 3.5per cent to close August 2024 at 96,579.54 basis points.

The dowward performance between July and August 2024 brings the  stock market to 29.16 per cent  YtD.  

In addition, the stock market in the first trading week in September 2024 dropped by 0.15 per cent to close the week at 96,433.53 basis points amid profit-taking in listed fundamental stocks. 

According to the weekly market report, the sectoral performance was in the mixed bag. The NGX Oil & Gas index recorded a weekly gain of 1.48 per cent, while NGX Banking index lost 0.23 per cent W-o-W. On the contrary, the NGX Insurance, NGX Consumer Goods, and NGX Industrial Goods indices closed the week down by 4.76 per cent, 1.18 per cent, and 0.13 per cent respectively.

Also, market breadth for the week was negative as 36 equities appreciated in price, 46 equities depreciated in price, while 69 equities remained unchanged. Industrial & Medical Gases Nigeria led the gainers table by 32.58 per cent to close at N35.00, per share. Berger Paints followed with a gain of 31.12 per cent to close at N18.75, while e-Tranzact International went up by 20.59 per cent to close to N6.15, per share.

On the other side, R T Briscoe led the decliners table by 27.61 per cent to close at N2.57, per share. FTN Cocoa Processors followed with a loss of 18.38 per cent to close at N1.51, while Omatek Ventures declined by 18.18 per cent to close at 72 kobo, per share.

Overall, a total turnover of 2.141 billion shares worth N51.217 billion in 55,603 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 2.821 billion shares valued at N53.048 billion that exchanged hands prior week in 50,488 deals.

The Financial Services Industry (measured by volume) led the activity chart with 1.229 billion shares valued at N19.976 billion traded in 20,701 deals; contributing 57.40 per cent and 39.00 per cent to the total equity turnover volume and value respectively. The Oil and Gas Industry followed with 262.484 million shares worth N17.996 billion in 14,275 deals, while the Services Industry traded a turnover of 155.587 million shares worth N532.941 million in 3,558 deals.

Trading in the top equities; Access Holdings, Oando and Zenith Bank (measured by volume) accounted for 517.336 million shares worth N24.454 billion in 15,502 deals, contributing 24.16 per cent and 47.75 per cent to the total equity turnover volume and value respectively.

Analysts have anticipated mixed sentiments in the Nigerian stock market with position-taking and portfolio reshuffling likely to intensify as investors await the half-year publication of interim dividend-paying banks.

The bulls lost momentum last week, paring previous week’s gains, despite the widespread optimism that created buying opportunities for market participants from the prior week on the back of sell-sentiment across some major sectors with continued profit-taking activities and portfolio rebalancing in expectation of more interim dividend paying stocks second-quarter financial scorecards.

In the new week, analysts at Cowry Assets Management Limited said, “we expect mixed sentiment to rule the market activities with position-taking and portfolio reshuffling likely to intensify as market players await the half-year publication of interim dividend paying banks.

“From a technical perspective, the NGX is showing signs of recovery, as indicated by the candlestick formations and momentum indicators, with equity investors poised to capitalise on pullbacks to acquire value stocks. Nevertheless, we continue to advise investors to focus on fundamentally sound stocks.”

Analysts at Cordros Research in a report said, “We anticipate a mix of cautious trading and selective buying as market participants watch out for any signs of broader market interest. However, we acknowledge the likelihood of profit-taking activities on stocks that have experienced notable appreciation in recent weeks.”

The chief operating officer of InvestData Consulting Limited, Mr. Ambrose Omordion stated that, “we expect mixed sentiment on bargain hunting on pullbacks and banks interim dividend paying stocks in expectation of their half year numbers as sector rotation continue in the market. Portfolio repositioning is however continuing, with investors taking advantage of pullbacks to buy into value.”

Omordion added that, “this is amid the volatility and pullbacks that add more strength to upside potential, saying that “consequently, investors should take advantage of price correction. Also looking at the trends and events across the globe and domestically.”