Nigeria’s Equity Market Drops 0.33% As Investors Lose N188bn In First October Trade

Nigeria’s Equity Market Starts October with Decline

Nigeria’s equity market opened the month of October 2024 with a significant loss, as the Nigerian Exchange Limited (NGX) recorded a 0.33% decline.

Investors saw N188 billion wiped off their holdings on the first trading day, October 2, 2024. This drop came after a day off due to a public holiday, with the All-Share Index (ASI) closing at 98,232.39 points, down from the previous day’s 98,558.79 points.

The total market capitalization also decreased from N56.635 trillion to N56.447 trillion.

“The market experienced a slow start in October as investors were cautious due to recent economic indicators, such as the recent Monetary Policy Rate (MPR) hike,” said an analyst from Futureview Research. “We expect this cautious sentiment to continue in the coming days as investors reassess their portfolios.”

Major Stock Losses in the Equity Market

The equity market witnessed notable losses among key stocks, with Ellah Lakes, Caverton, and Livestock Feeds being the primary laggards.

Ellah Lakes saw a drop, falling from N4.43 to N3.99, which represents a loss of 9.93%. Similarly, Caverton fell by 9.92%, from N2.42 to N2.18, while Livestock Feeds declined by 9.03%, from N2.99 to N2.72.

These declines were mainly attributed to profit-taking activities following a bullish market in the previous quarter. “It’s a typical market response after a prolonged positive run,” said a trader at the NGX.

READ ALSO: Nigeria’s Equity Market Surges By N1.158trn In September

Active Stocks and Market Activity

Despite the overall decline, some stocks saw trading activity. United Bank for Africa (UBA), Zenith Bank, Veritas Kapital, Ellah Lakes, and Regency Assurance were the most actively traded. A total of 425,764,914 shares valued at N8.450 billion were exchanged in 11,954 deals on Wednesday.

“Trading volume remained relatively strong, despite the decline in market value. Investors are being selective, focusing on stocks with strong fundamentals,” a market observer noted.

Market Outlook: Analysts Predict Mixed Performance

Looking ahead, analysts predict a mixed performance in the equity market. The recent hike in the Monetary Policy Rate (MPR) to 27.25% has put pressure on the market, leading to cautious trading and selective investment decisions.

Futureview Research analysts, in their weekly stock recommendations, stated, “We expect a mixed performance in the local equity market as investors reassess portfolios in response to the MPR hike, with selective bargain hunting and strategic dividend positioning.”

Vetiva Research analysts also pointed out that the third quarter earnings reports, expected later in October, will play a crucial role in shaping market sentiment. “With the third quarter (Q3) now behind us, we anticipate that investors will remain on the sidelines, waiting for Q3 earnings reports for guidance,” Vetiva noted. “Bargain hunting could drive sentiment in the short term, especially as investors return from the public holiday.”

Cautious Optimism in the Equity Market

As the equity market navigates the challenges of the new quarter, investors are expected to remain cautious, especially with the economic backdrop of rising interest rates and inflation concerns. Analysts expect trading to be driven by selective investment and bargain hunting, as market participants await key earnings reports for clearer guidance on the market’s direction.

In summary, the equity market started October on a low note, but with strategic positioning and selective trading, a gradual recovery may be on the horizon.