Analysts Advise Investors to Focus on Strong Stocks as Nigerian Equities Market Faces Fresh Pressure

The Nigerian equities market came under renewed pressure last week as persistent sell-offs wiped billions of naira from investors’ portfolios, prompting market analysts to advise caution and a stronger focus on fundamentally sound stocks. With volatility continuing to shape market activity, experts believe investors should prioritize companies with strong earnings performance, attractive valuations, and reliable dividend prospects rather than speculative investments.

According to market analysts, the current downturn reflects growing investor caution amid prevailing economic uncertainties and a wave of profit-taking in stocks that have delivered impressive gains since the beginning of the year. Futureview Group noted that investors are increasingly gravitating toward quality stocks with solid fundamentals, while Cowry Assets Management Limited expects market activity to remain mixed as investors weigh economic conditions against existing market opportunities.

The bearish sentiment was evident in the performance of the Nigerian Exchange last week. The benchmark NGX All-Share Index declined by 1.65 percent to close at 232,049.02 points, while market capitalisation dropped by N2.422 trillion to settle at N148.905 trillion. Although the market still maintains a year-to-date return of 49.12 percent, the recent losses suggest that investors are becoming more selective as profit-taking continues across major sectors.

Market breadth also reflected the prevailing weakness, with only 19 stocks recording gains compared to 59 decliners. International Energy Insurance emerged as the week’s top performer after gaining 36.5 percent, followed by McNichols and Airtel Africa. On the losing side, Trans-Nationwide Express suffered the sharpest decline, while Academy Press and Consolidated Hallmark Insurance also recorded significant losses, underscoring the broad-based nature of the market retreat.

Despite the decline in share prices, trading activity remained robust. Investors traded 2.324 billion shares worth N134.486 billion in over 249,000 deals during the week. The Financial Services sector dominated market activity, accounting for more than 65 percent of total traded volume, while ICT and Consumer Goods sectors also contributed significantly. Analysts believe that while short-term volatility may persist, investors who focus on fundamentally strong companies are likely to uncover opportunities as the market adjusts to current economic realities.

source: Leadership