Kayode Tokede
Following negative sentiment trading activities, investors in the Nigerian stock market have lost an estimated N858.7nillion of their investment in two days as profit-taking continued to rock some fundamental stocks.
THISDAY gathered that the overall market capitalisation dropped between October 2 and 3, 2024 to N55.777 trillion, representing a decline of N858.7billion or 1.52 per cent from N56.635 trillion it opened for trading.
When the market capitalisation of all listed companies opened trading October 2, it dropped by N187.6 billion and closing yesterday, it depreciated further by N671.2 billion.
The stock market depreciated by N187.6billion in the first trading day on the backdrop of investors sentiments trading leading to profit-taking activities in Oando Plc that dropped by 6.8per cent, United Bank for Africa Plc that was down by 4.6 per cent and FBN Holdings that fell by 4.4 per cent.
While in the second trading day, investors’ sell pressures in Dangote Cement Plc (10 per cent decline to N478.80 per share) contributed to the N671.2 billion decline by market capitalisation.
Consequently, the Nigerian Exchange Limited All-Share Index (NGX) closed yesterday trading at 97,064.42basis points, a decline of 1,494.38basis points or 1.52per cent in two days from 98,558.79basis points the stock market opened for trading., while Year-to-Date returns stood at 29.8per cent.
Capital market analysts had anticipated a bearish performance on the Nigerian stock market as investors reassess their portfolio following the recent increase in the Monetary Policy Rate (MPR) to 27.25 per cent.
They noted that “all eyes are also on the third quarter (Q3) earnings reporting season expected to usher in seasonality and sentiments necessary for discerning investors and smart traders to take advantage of the last quarter of the year volatility and season to create wealth.”
The current state of the market with likely continuation of trend or reversal has created opportunity to buy into real value and fairly priced companies as revealed by their half-year corporate numbers and price to earnings ratios ahead of their Q3 scorecards. As correction at this point makes the stock market attractive due to sentiments associated with year-end and last quarter of every year.
Already, companies have started notifying the market of their closed period and board meeting to approve their scorecards in the new month. The pullbacks of some companies that seen profit taking or selloffs in recent days creates another opportunity for new entrants who understand the big picture and market dynamics.
The chief operating officer of InvestData Consulting Limited, Mr. Ambrose Omordion, said that “we expect mixed sentiment to continue on profit taking and portfolio rebalancing ahead of the quarter-end window dressing and Q3 earnings session. Also, sector rotation continues in the market, with investors taking advantage of pullbacks to buy into value.
“This is amid the volatility and pullbacks that add more strength to upside potential. Consequently, investors should take advantage of price correction. Also looking at the trends and events across the globe and domestically.”
Analysts at Afrinvest Limited added that “this week, we anticipate a bearish performance on the local bourse as investors reassess their portfolio following the recent 50 basis points incr
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