Nigeria’s Stock Succumbs To Market Correction As Investors Book Profits
Nigeria stock market fell further on Tuesday, dragged down by activities of investors booking profits from the previous gains in the market.
The main mark index fell 0.8 percent to close the day transactions at 29,462.76 points while market capitalisation dropped to N15.17 trillion from N15.30 trillion.
Shares of Access Bank lost 6.51 percent, Guaranty Trust Bank (GTB) fell by 5.29 percent while United Bank for Africa (UBA) declined by 3.95 percent to dragged the market index down.
Traders said investors were busy selling down their position to benefit from the capital gains posted over the past weeks on the shares of some top companies.
Stanbic IBTC Stockbrokers had predicted a market correction before the month ends because the previous rally in the market was not based on strong fundamentals.
Most listed companies, IBTC said in its projection for the market in the first month of the year “are yet to release their financial results, therefore, there is no basis for the bullish trend.”
IBTC said it expects the market to crash before the end of January.
However, some analysts said the initial rally in the market was driven by increased liquidity in the banking system and lack of investment opportunity in the money market,
Yields on bonds and treasury bills have crashed from the previous high while the overnight lending rate on the interbank market traded at around 3.5 percent on Tuesday with average yields on bond trading at single-digit returns.
A stockbroker said many hitherto investors in the market instruments are now taking positions in the stock market, leading to the initial rally in the market.
They said the market may not really crash as some financial institutions will soon announcing their end of year financial result with expectations of bounty dividend payments to investors.
“We see some investors coming back strong to position for the impending dividend payments by some bellwether companies,” another stockbroker told Global Financial Digest.