The Nigerian Exchange experienced a downturn on Thursday, August 3, 2023, snapping a three-day winning streak as investors cashed in on recent gains, primarily in large-cap stocks. This profit-taking led to a decrease in the All-Share Index by 0.39%, equivalent to a 478.64-point drop, settling at 120,779.05. Consequently, the market capitalization retracted by N308 billion, closing at N76.5 trillion compared to N76.81 trillion the previous day. Despite this daily setback, the market maintained a positive trajectory over broader timeframes, boasting a 2.48% gain for the week, a 9.91% surge over the past four weeks, and an impressive year-to-date return of 17.35%, reflecting underlying strength and investor confidence in the Nigerian market.
Market activity presented a mixed picture. Trading volume increased by 4% with 892.97 million shares exchanged, while the turnover value declined by 30% to N18.23 billion across 25,375 deals. The number of deals also saw an 11% increase compared to the previous trading session. This suggests a shift in investor behavior, potentially prioritizing higher volume trades in lower-priced stocks, contributing to the decrease in overall turnover despite the increased trading activity. The mixed performance across volume, turnover, and the number of deals underscores the complex dynamics at play in the market, influenced by factors such as investor sentiment, profit-taking strategies, and specific company performance.
Of the 128 equities traded, 33 advanced while 38 declined, highlighting the selective nature of the sell-off. Skye Shelter Fund led the gainers with a 10% surge, closing at N249.25 per share. Unilever Nigeria also mirrored this growth with a 10% increase, closing at N51.70. Neimeth International Pharmaceuticals and UAC of Nigeria followed closely, appreciating by 9.98% and 9.97%, respectively. These gains, concentrated in specific stocks, suggest that while some investors engaged in profit-taking, others continued to seek opportunities in companies perceived to have strong growth potential.
Conversely, Thomas Wyatt Nigeria experienced the steepest decline, shedding 10% to close at N2.07 per share. Nigerian Aviation Handling Company followed suit, down by 9.99% to N91.00. Oando Plc and Associated Bus Company also faced significant losses, declining by 9.96% and 8.92%, respectively. This divergence in performance across different stocks underscores the importance of sector-specific analysis and company fundamentals in understanding market movements. The declines could be attributed to various factors, such as profit-taking after recent gains, industry-specific challenges, or company-specific news influencing investor sentiment.
Trading volume was dominated by Ellah Lakes with 113 million shares traded, followed by Access Holdings with 76.2 million shares. Caverton Offshore Support Group and Japaul Gold and Ventures also recorded substantial trading volumes of 64.9 million and 61.6 million shares, respectively. These high trading volumes suggest heightened investor interest in these particular companies, potentially driven by news, earnings reports, or speculative trading activities. Analyzing the trading patterns of these stocks provides further insight into market sentiment and investor behavior.
Sectoral performance was mixed, mirroring the overall market trend. The Industrial Index and the Insurance Index recorded gains of 2.11% and 1.08%, respectively, suggesting continued positive sentiment in these sectors. However, the Top 30 Index, Pension Index, Premium Index, and Main Board Index all experienced declines, highlighting the broader market sell-off. This divergence in sectoral performance underscores the importance of understanding sector-specific dynamics and the influence of macroeconomic factors on different industries.
Market analysts at Afrinvest anticipated the bearish trend to persist due to continued profit-taking activities. This suggests that the market may experience further corrections in the short term as investors reassess valuations after the recent rally. However, the underlying positive year-to-date return suggests a degree of resilience in the market. It’s important to note that market predictions are subject to change based on various factors, including economic data, global market trends, and unforeseen events. The preceding day, Wednesday, had seen a significant market capitalization increase of N1.18 trillion, fueled by positive investor sentiment and strong corporate earnings, notably from Oando Plc. This highlights the dynamic nature of the market and the influence of company performance on investor behavior.
