Stock market sees first dip in election week

As Nigerian prepare to elect a new President on February 25, the stock market community is also affected by tensed atmosphere on who pilots the affairs of the country in next four years.

For the first time this week, the market on Tuesday recorded a decline by 0.06percent or N19billion, thereby pushing lower the record positive return year-to-date (YtD) to 5.73 percent.

The Nigerian Exchange Limited (NGX) All-Share Index (ASI) and its equities market capitalisation decreased from preceding day’s 54,224.35 points and N29.538trillion respectively to 54,189.31 points and N29.519billion.

International Breweries was the highest loser on Tuesday after its share price decreased from N4.70 to N4.50, losing 20kobo or 4.26percent. It was followed by that of Transcorp which dropped from a high of N1.24 to N1.19, shedding 5kobo or 4.03percent.

Coronation Research analysts in their February 20 note to investors said, “The first seven weeks of the year have provided equity investors with a gain on the NGX All-Share Index. As has often happened in the past, investors are faced with the question of what to do following a January rally”.

Read also: Domestic investors shun elections risks as stocks maintain 5-month rally

“Our analysis of 14 past January rallies suggests that, as long as there are no obvious problems or obstacles ahead, January rallies tend to imply full-year rallies. Therefore, any nervous trading over the election period may provide a buying opportunity, especially for dividend-hungry investors looking to be paid a few months from now,” the analysts said.

Geregu Power, GTCO, Zenith Bank, Access Corporation and UBA were top-5 traded stocks on Tuesday as equities traders in 2,950 deals exchanged 254,174,108 shares valued at N15.577billion.

“The market has rallied significantly in consecutive months, raising fears of an over-extended market. We expect sustained bullish sentiments as we anticipate downbeat money market yields till second quarter (Q2) of 2023 and a gradual decline in trading volumes in the coming days.

“However, as technical indicators point to more significant downside potential for equities, we consider buying equities a ‘riskier’ rather than a ‘wrong’ strategy while favouring reducing portfolio exposures as the ideal approach. Equity stakeholders can look to book profits off stocks that have crossed the overbought region, as the RSI indicates,” said analysts at Lagos-based United Capital in their February 21 note.