Portfolio investors and their local counterparts clawing back gains recorded in an earlier three weeks rally have dipped Nigerian equities in four consecutive trading sessions as the NSEASI fell by 3.5 percent cumulatively in the bearish period to 43,529.06 points from a high of 45,092.83 points.
A broad sell-off occasioned by portfolio investors cashing profit and locals cashing to pay school fees have put pressure on the market this week, according to analysts who spoke to businessamlive.
Specifically, market year-to-date (YTD) gain plummeted to 13.8% from the over 17 percent recorded prior to the bears’ charge, just as market capitalization pared N550.6 billion week to date.
Sola Oni, chief executive of Sofunix Investment and Communications, said the current market development was normal, that prior to the downward trend, the market was going up but that it was never expected to stay up forever on account of profit taking.
“It is normal, in the sense that portfolio investors took advantage of the cheapness of the market, better corporate results, dividends and stable forex regime to buy into the market hence the rally we had in the first three weeks,” he said, adding that after mopping up gains it is normal to take profit.
“Now the supply side is getting above the demand as profit taking rules,” Oni explained.
Mike Okpara, CEO of Crane Securities equally said the present losing streak in the market is attributable to profit taking.
According to him, the low prices earlier witnessed in the stock market enticed foreign investors to swoop on the market to take positions, adding that local investors were not left out in this swoop on the market.
“But profit takers would not allow the trend to continue as they sold, leading to losses witnessed in recent days,” he noted.
At the end of Thursday’s trade, the NSEASI fell 99 basis points to close at 43,529.06 points while year-to-date (YTD) return moderated to 13.8%.
Specifically, selling pressures across the board especially in banking stocks – GUARANTY (-2.0%), STANBIC (-5.0%) and DIAMOND (-9.3%) continued to weigh on performance. However, activity level was mixed as volume traded declined 6.6 percent to 500.9 million units while value traded rose 28.0 percent to settle at N6.6 billion respectively.
Sector performance was mixed today as two of five indices closed in the red, two trended northwards and the other flat. The industrial goods index led laggards, down 2.0% following losses in DANGCEM (-3.3%). Likewise, the banking index shed 0.4% consequent on price depreciation in GUARANTY (-2.0%), DIAMOND (-9.3%) and ETI (-1.5%).
On the other hand, the consumer goods index emerged the top gainer closing the day 0.7% higher, as DANGSUGAR (+10.2) and NESTLE (+1.7%) buoyed performance. The oil & gas index also appreciated, up 0.3% following a rally in SEPLAT (+1.1%). The insurance index closed the day flat.
Investor sentiment- measured by market breadth (advance/ decline ratio) improved to 0.7x from 0.3x recorded yesterday consequent on 21 stocks advancing against 30 decliners.
The day’s best performing stocks were DANGSUGAR (+10.2%), AFRIPRUD (+4.2%) and UBA (+4.1%) while the worst performers were GLAXOSMITH (-9.7%), CAVERTON (-9.4%) and DIAMOND (-9.2%).
Market watchers believe the trend would continue for few more trading sessions until prices are low enough to attract another round of bullish trend.