Nigeria’s Equity Market Sees 0.24% Decline As Investors Brace For Volatility

Equity Market Drops By 0.24% Amid Investor Caution

The Nigerian equity market experienced a decline of 0.24% at the start of the trading week, resulting in a N112 billion reduction in market value.

This decrease in the equity market was primarily driven by significant sell pressure on consumer goods and industrial stocks, despite positive movements in the banking, insurance, and oil and gas sectors.

By the end of trading on Monday, the Nigerian Exchange Limited (NGX) All Share Index (ASI), had dropped from 96,433.53 points to 96,206.46 points, while the market’s year-to-date (YtD) return fell to 28.66%.

The total value of listed stocks also dropped to N55.282 trillion, down from N55.394 trillion.

Transcorp Power and Julius Berger Lead Declines

Major laggards in the equity market included Transcorp Power and Julius Berger. Transcorp Power saw a sharp decline, with its stock price dropping by 9.99% from N335.20 to N301.70. Julius Berger followed closely, experiencing a 10% decline as its stock price fell from N170.50 to N153.45.

In total, investors engaged in 10,412 deals, exchanging over 774 million shares worth N14.647 trillion. Jaiz Bank, Zenith Bank, FBN Holdings, GTCO, and Japaul Gold were among the most actively traded stocks.

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Analysts Predict Increased Volatility In The Equity Market

Vetiva Research analysts highlighted potential volatility in the equity market for the rest of the week, as mixed signals across sectors are likely to keep the market under pressure.

In a note released on September 9, Vetiva stated, “We expect investors to brace for potential volatility as a red start to September and mixed signals could keep the broader market under pressure this week.”

Despite the negative start, Meristem Research analysts offered a more optimistic outlook, predicting increased buying interest in the equity market, especially in the oil and gas sector.

“In our view, investors’ sentiments towards tickers with attractive prices will spur market activities during the week,” Meristem analysts noted. They added that “we expect more buying interest in the oil and gas sector due to recent activities that may entice investors into taking positions.”

Equity Market to Benefit from Improving Macroeconomic Indicators

Analysts believe that improving macroeconomic indicators could rekindle investor interest in the equity market. Meristem Research stated, “Additionally, improving macroeconomic indicators might increase investors’ sentiment. We anticipate that declining yields in the fixed-income market will rekindle interest in the equity market.”

While analysts do not rule out occasional profit-taking during the week, they foresee overall positive market activity. However, investors remain cautious, particularly given the potential for further volatility in the coming days.

The equity market’s performance this week is expected to be influenced by macroeconomic factors, investor sentiment, and activities in specific sectors like oil and gas.

Despite the initial 0.24% drop, some analysts predict a bullish outlook, with improving economic conditions likely to drive renewed interest in equities.