Investors? apathy persists at Nigerian Exchange Limited (NGX), prolonging the equities market?s bearish trend for the fourth consecutive week. As risk aversion prevailed last week, the market suffered a N1.4 trillion loss year-to-date (YTD), fuelling concerns about prolonged negative sentiments in the equity markets.

At the close of trading last Friday, the market capitalisation of listed equities fell from N67.193 trillion achieved as of February 28 to N65.819 trillion, representing a 2.1 per cent or N1.4 trillion loss.

The all-share index (ASI), which measures the performance of listed equities, also took a hit, shedding 2,858.43 points (2.7 per cent) to close at 104,962.96 points, down from its previous level of 107,821.39 points.

The persistent selloff came despite signs of easing inflation, as indicated by the Consumer Price Index (CPI) report for February 2025. While this marked the second consecutive month of inflationary decline, the positive failed to lift investors? sentiment.

Instead, market participants remained fixated on broader macroeconomic uncertainty, including global financial market volatility, fluctuating foreign exchange rates and concerns over the direction of monetary policy.

The extended market downturn was reflected in a significant decline in trading activity. The volume of shares traded throughout the week fell by 11.5 per cent to 2.90 billion units, while the total value of transactions dipped further, plunging by 24.3 per cent to N48.06 billion.

In addition, month-to-date and year-to-date returns also weakened to -2.7 per cent and +2 per cent, underscoring the market?s inability to sustain positive momentum.

Analysts noted that the sharp pullback in market activity was primarily driven by cautious investor behaviour. With growing uncertainty surrounding corporate earnings releases and macroeconomic conditions, many investors opted to stay on the sidelines rather than engage in aggressive trading.

A look at sectoral performance painted a grim picture, with five of the six major indices closing in the red. The NGX consumer goods index emerged as the sole gainer, rising by a marginal 0.06 per cent week-on-week.

This modest appreciation was fueled by renewed investor interest in stocks such as Neimeth, Northern Nigeria Flour Mills (NNFM), NASCON Allied Industries, and Dangote Sugar, which recorded slight price upticks.

In contrast, the NGX industrial index bore the brunt of the market downturn, suffering the steepest sectoral decline with a 3.39 per cent drop. The plunge was driven by heavy sell pressure on key industrial stocks such as BUA Cement, UPDCREIT and Cutix Plc, experiencing notable price depreciation.

The financial sector was not spared, as the NGX insurance index and NGX banking index posted significant declines of 2.8 per cent and 2.5 per cent respectively.

Financial stocks, including Universal Insurance, Sovereign Trust Insurance, FCMB Group, FirstBank HoldCo and AccessCorp, witnessed substantial selloffs. The bearish sentiment extended to the energy and commodities markets, with the NGX oil and gas index shedding 1.08 per cent, while the NGX commodity index declined by 0.45 per cent.

Despite the prevailing negative sentiment, analysts at Cowry Asset Management believe the market presents buying opportunities, especially for long-term investors.

?The prevailing market conditions indicate that the market is currently oversold, presenting a potential entry point for discerning investors. ?The ongoing pullback has created an environment where dividend-paying stocks are becoming increasingly attractive, as their yields are likely to improve in response to recent price declines,? it stated.

As March trading nears its end, market watchers anticipate a shift in investor strategy, with some repositioning their portfolios ahead of dividend season. Historically, this period has provided opportunities for capital appreciation and income generation, as investors take positions in stocks offering strong dividend yields.

However, near-term volatility remains a concern. Analysts at Cordros Capital anticipate continued market fluctuations in the coming week as investors digest a wave of audited corporate earnings reports and dividend announcements.

These financial disclosures will likely play a critical role in shaping market sentiment and determining the extent of the ongoing corrections. Moreover, external factors such as trends in global financial markets, monetary policy adjustments by the Central Bank of Nigeria (CBN), and the broader economic outlook will continue to influence investor confidence and market direction.

Given the current volatility, analysts also stressed the need for investors to adopt a cautious but strategic approach to stock selection.

According to them, stocks with strong fundamentals, resilient earnings growth, and consistent dividend payouts are expected to perform better amid market turbulence.

While some investors may see the current downturn as an opportunity to buy at lower prices, others remain wary of potential further declines, especially as uncertainty looms over Nigeria?s economic trajectory.

For now, the NGX remains at a crossroads, with market participants closely watching key indicators to determine whether the recent downturn is merely a temporary pullback or the beginning of a deeper market slump. (The Guardian)

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