Stock market sustains profit taking, as investors lose N2.4trn

The Nigerian equities market experienced a notable rebound on Tuesday, marking a significant turnaround for investors who had faced losses in the preceding weeks. According to reports, the market saw a surge in investor confidence, resulting in a gain of N653 billion. This increase was primarily driven by renewed buying interest in both large- and mid-cap stocks, such as Airtel Africa, Prestige Assurance, Cutix, and Regency Alliance Insurance, among others. These stocks were among the top performers, contributing significantly to the overall positive movement in the market.

The market capitalization increased by N653 billion, or 0.45 percent, reaching N147.217 trillion from N146.564 trillion recorded on Monday. Concurrently, the All-Share Index climbed by 1,017.26 points, or 0.45 percent, to close at 229,419.18, compared to 228,401.92 from the previous session. This upward trend marked a significant improvement in the Year-to-Date (YTD) return, which now stands at 47.43 percent. However, the market breadth closed negatively, with 32 stocks losing value against 19 gainers.

Despite the positive closure, several stocks faced substantial declines. Custodian Investment led the losers' chart, dropping by 9.98 percent to close at N65.85. PZ Cussons and RT Briscoe followed closely behind, each declining by 9.95 percent, closing at N85.50 and N9.95 per share, respectively. UPDC and Honeywell Flour also suffered significant drops, with losses of 9.86 percent and 9.78 percent, respectively. In contrast, Airtel Africa, Critical Minerals Financing Corp, and Prestige Assurance stood out as the leading gainers, each rising by 10 percent. Cutix and Regency Alliance Insurance also performed well, gaining 9.70 percent and 9.09 percent, respectively.

Market activity, however, showed a slight decline, with investors trading 966.66 million shares worth N39.95 billion in 49,579 deals. This represented an 8.44 percent decrease in volume from the previous session. Linkage Assurance emerged as the most actively traded stock by volume, with 95.97 million shares traded, accounting for 9.93 percent of the total volume. Aradel led the market by value, with transactions amounting to N11.59 billion, representing 29.02 percent of the day's total value traded.

In the preceding weeks, the Nigerian stock market had experienced a period of sustained profit-taking, with investors losing over N2.4 trillion due to price declines. This loss followed a previous week during which investors had lost over N5.6 trillion, mainly due to a massive selloff in high- and mid-capitalized stocks. Analysts noted that the negative close reflected the market's current phase of consolidation after an impressive rally that positioned the Nigerian Exchange (NGX) as one of the strongest performers among global frontier and emerging markets this year.

Despite the recent pullback, the broader market structure remains bullish, according to analysts at InvestData Consulting Limited. They highlighted that the index continues to trade above key medium-term support levels, and the year-to-date gain of over 50 percent underscores the strength of the underlying trend. Looking ahead, analysts expect investors to focus on stocks with strong earnings growth potential, attractive dividend yields, and resilient business fundamentals. Market sentiment will likely be influenced by developments in the fixed-income market, foreign exchange stability, crude oil price movements, and upcoming corporate results. Portfolio rebalancing activities by institutional investors could further drive trading patterns in the weeks ahead.

As the market resumes its activities for the month of July, it opened with a bearish trend, indicating sustained selling pressure that weighed on investor sentiment. The All-Share Index fell by 3,729.11 points, representing a decline of 1.63 percent to close at 225,690.07 points. Similarly, the market capitalization dropped by N2.393 trillion to close at N144.825 trillion. This decline was attributed to price depreciation in large and medium-capitalized stocks, including Aradel Holdings, Dangote Cement, NASCON Allied Industries, Zenith Bank, and Guaranty Trust Holding Company.

The market breadth remained negative, with 28 gainers against 33 decliners. Among the gainers, Austin Laz & Company stood out with a 10 percent appreciation, closing at N3.30 per share. Guinea Insurance followed with a gain of 9.89 percent, closing at N1.00, while Abbey Mortgage Bank advanced 9.66 percent to close at N7.95 per share. Daar Communications and Regency Alliance Insurance also saw appreciations of 9.60 percent and 9.52 percent, respectively.

On the losers' chart, McNichols, Neimeth International Pharmaceuticals, and Aradel Holdings led the way, each declining by 10 percent to close at N7.65, N8.10, and N1,275.80 per share, respectively. NASCON Allied Industries followed with a decline of 9.98 percent to close at N197.60, while International Breweries shed 9.52 percent to close at N9.50 per share.

Overall, the total volume traded declined by 54.7 percent to 437.60 million units, valued at N12.73 billion, exchanged in 45,068 deals. Transactions in the shares of Sterling Financial Holdings Company led the activity chart, with 124.618 million shares worth N980.635 million. UPDC followed with 40.091 million shares valued at N130.365 million, while Access Holdings traded 36.844 million shares valued at N811.552 million. Honeywell Flour Mills and United Capital also saw significant trading volumes, with transactions totaling N490.085 million and N469.144 million, respectively.