Last Updated on 27 December 2024 by Naijadazz
The Nigerian stock market experienced a notable downturn on Tuesday, as investors divested from key sectors including banking, consumer goods, and industrial stocks. This sell-off resulted in a contraction of the Nigeria Exchange Ltd. (NGX) market capitalization by N49 billion, equivalent to a 0.09% decrease, concluding the day at N56.126 trillion from its opening figure of N56.175 trillion.
In tandem with this decline, the All-Share Index (ASI) retreated by 0.09%, shedding 87 points to settle at 99,217.60, down from the previous day’s close of 99,304.12. This setback has moderated the Year-To-Date (YTD) performance, which now stands at 32.69%.
The market’s downward trend was primarily fueled by significant selling pressure on major stocks, particularly in the financial and consumer goods sectors. Notable companies affected included Zenith Bank, United Bank For Africa (UBA), Access Corporation, Dangote Sugar, Honeywell Flour, and Nigerian Breweries. These blue-chip stocks often serve as barometers for the broader economic sentiment in Nigeria.
Interestingly, despite the overall bearish sentiment, the market breadth remained positive, with gainers outnumbering losers 27 to 23. Okomu Oil emerged as the day’s top performer, surging by 10% to close at N291.50 per share. Other significant gainers included John Holt, which rose by 9.79% to N3.14, and Consolidated Hallmark Holdings, which appreciated by 9.43% to finish at N1.74 per share.
On the flip side, Oando led the decliners, shedding 9.75% to close at N12.50. UPL and Academy also experienced substantial losses, dropping by 9.09% and 8% respectively. The real estate sector wasn’t spared, with UPDC Real Estate Investment Trust declining by 7.86% to close at N1.29 per share.
A closer look at market activity revealed a significant contraction in trade turnover, which plummeted by 68.09% compared to the previous session. The day saw 361.57 million shares changing hands in 8,511 transactions, valued at N6.16 billion. This marked a sharp decline from the previous session’s figures of 973.62 million shares worth N19.32 billion traded in 9,941 deals.
Among the day’s most notable transactions, Veritas Kapital offloaded 34.95 million shares valued at N31.38 million, while FBN Holdings and Access Corporation saw significant trading volumes of 27.40 million and 26.98 million shares respectively.
The current market downturn can be attributed to a confluence of factors, including ongoing macroeconomic challenges, shifting investor sentiment, and global economic uncertainties. The Nigerian market, like many emerging markets, remains susceptible to external influences such as fluctuations in oil prices, exchange rate volatility, and geopolitical developments.
Moreover, recent monetary policy adjustments, particularly interest rate hikes by the Central Bank of Nigeria, have increased the attractiveness of fixed-income securities. This has prompted some investors to recalibrate their portfolios, moving away from equities in favor of potentially safer, interest-bearing instruments.
As the Nigerian stock market navigates these choppy waters, investors are advised to maintain a cautious stance. While opportunities for value picks may emerge in this bearish climate, it’s crucial for market participants to stay informed about broader economic indicators and company-specific fundamentals. The current market dynamics underscore the importance of diversification and thorough risk assessment in investment strategies.
