The stock market wednesday recorded its biggest daily loss in the last eight months following continued sell-offs in big counters.
Specifically, the Nigerian Stock Exchange (NSE) All-Share Index went down by 3.46 per cent to close at 32,292.79, while market capitalisation shed N422.2 billion to close N11.8 trillion. Consequently, the year-to-date decline worsened to 15.6 per cent.
According to analysts at Meristem Securities Limited said significant selloffs on top counters across all sectors today dragged market performance.
“Weak investor sentiment was adequately captured by a poor market breadth of 0.30x, as investors flee the Nigerian bourse. We do not expect a deviation from this trend in the remaining trading days this week, implying a negative close to the market this week,” they said.
A total of 37 stocks declined compared with only 10 that appreciated. The price losers were dominated by heavy weights such as Dangote Cement Plc, Nigerian Breweries Plc, Zenith Bank Plc, FBN Holdings Plc and Stanbic IBTC Holdings Plc.
However, Universal Insurance Plc led the price losers with 10 per cent, trailed by Cement Company of Northern Nigeria Plc with 9.8 per cent. On the positive side, Law Union & Rock Insurance Plc led the price gainers with 9.0 per cent, followed by Skye Bank Plc with 8.9 per cent.
From every indication, investors are ignoring strong fundamentals of some of the stocks and continued to exit due to their apprehension over the current political situation.
Analysts at Afrinvest (W.A) have made some stocks in the banking, consumer goods and industrial goods sectors to be attractive. In the banking sector, for instance, the said United Bank for Africa Plc has upside potential of 56 per cent and Zenith Bank Plc 52 per cent. GTBank Plc has 27 per cent growth potential, while Access Bank Plc has 11.3 per cent.
In consumer goods sector, the analysts said UAC of Nigeria Plc has upside potential of 122 per cent; Nigerian Breweries Plc has the potential to gain 60 per cent; PZ Cussons Nigeria Plc 48.5 per cent and Flour Mills of Nigeria Plc 29.9 per cent. In the industrial goods sector, Lafarge Africa Plc can rise by 158 per cent and Dangote Cement Plc 28.5 per cent.
According to them, while risk factors remain on the horizon, they are optimistic of an impending bullish streak in the market as equities near trough points.
“We advise investors to be on standby as we perceive the turning point imminent whilst echoing our long-term focus on fundamentally sound stocks with attractive entry prices and prospects of, at least, double digit upside potential,” they stressed.
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