Profit taking weighs on Nigerian stocks

by | February 10, 2018 7:23 am

The low risk appetite of stock investors on Customs Street manifested on the five trading days in the week ended February 9, 2018. Many stock investors walked into the ninth floor of the Nigerian bourse with the intention to offload stocks and take profit after the market hit record highs of over N2 trillion in capital appreciation last month.

This bearing outing last week resulted to the market’s benchmark performance indicator recording 3.39percent week-on-week (wow) decline. As demand for stocks remained low at the Nigerian Stock Exchange (NSE) in the trading week under review, the value of listed equities decreased by N543billion to N15.476trillion, down from N16.019trillion recorded at week-open.

The decline in stocks value helped fuel the year-to-date (YtD) returns of the Nigerian equities market which lowered to 12.77percent last Friday. The NSE All Share Index (ASI) which opened last week at 44,639.99 points declined to 43,127.92 points last Friday.

Following this outing in the trading week to February 9, 2018, investors are strongly advised to take a keen interest in companies’ fundamentals before taking investment position on them.

All the sectoral indexes closed last week in the red. The NSE 30 Index which tracks the top 30 companies in terms of market capitalisation and liquidity declined most last week by 3.59percent to 1,952.87 points. Also, NSE Industrial which provides an investable benchmark that captures the performance of the Industrial Sector dipped by 3.52percent last week to 2,323.85 points.

Other indexes and their performances last week include: NSE Bank at 571.56 points (-3.41percent); NSE Consumer Goods at 992.80points (-2.60percent); NSE Insurance declined by 0.73percent to 156.90 points; while NSE Oil & Gas Index which declined by 1.27percent closed the week in review at 358.85 points.

Lagos-based GTI Capital research analysts foresaw volatility in the market last week as the expectation for full-year 2017 earnings season heighten. They likewise expected profit- taking to be handy in view of the growth witnessed in the preceding week.

Meanwhile, analysts at Afrinvest Securities who also expected investors to book profits in early trades last week had iterated their positive near-term outlook for the market “as the earnings release season draws closer.”

Despite sell pressure which weighed on equities last week, many analysts still believe there remains a pool of untapped potential in the stock market as some stocks with good fundamentals still trade below their real value.