Despite a flurry of dividend announcements and ongoing corporate disclosures, uncertainty in both the domestic and global economy triggered negative sentiment on the Nigerian Exchange Limited (NGX) last week, as market capitalisation declined by N440.51 billion to close the week at N65.71 trillion.

This downturn reflected a broader loss of investor confidence as caution took hold amid a corporate earnings season that has so far delivered few surprises and little in the way of market-moving results.

At the close of transactions last week, the NGX all-share index (ASI) shed 0.9 per cent to close at 104,563.34 points, its lowest level in four weeks, underscoring the bearish tone that defined market activity.

Last week, investor apathy persisted despite a 90-day reprieve on U.S. tariffs that offered some relief globally. While such developments might have provided a springboard for recovery, they failed to ignite a meaningful rally on the exchange; instead, local investors remained focused on broader macroeconomic cues, opting for profit-taking and portfolio rebalancing.

This translated into a wave of sell-off across various sectors, as market participants rotated out of previously overbought stocks and repositioned into safer, more defensive counters.

The market’s weak breadth further confirmed the bearish mood, with only 27 gainers compared to 56 losers, resulting in a negative breadth ratio of 0.48x. This imbalance highlights the extent of the selling pressure, which cuts across most segments of the market.

This decline in market capitalisation came despite the listing of 5.98 billion additional shares of First HoldCo Plc on the NGX daily official list, a move that would typically be expected to add value to the bourse.

Sectoral performance largely mirrored the broader bearish trend. The NGX Insurance Index was the worst hit, down by 4.6 per cent due to steep declines in counters like Royal Exchange, Cornerstone and Lasaco.

The banking index followed, falling by 2.20 per cent amid profit-taking in Accesscorp and ETI. Consumer goods and oil and gas indices also came under pressure, losing 0.6 per cent and 0.5 per cent respectively, dragged by declines in May&Baker, Eterna, PZ Cussons and Oando.

Resilient sectors were not spared, as the Industrial Goods and Commodity indices fell by 0.3 per cent and 0.10 per cent, weighed down by losses in UPDC, Cutix and Aradel.

However, trading activity showed signs of resilience as weekly volume and value of trades spiked significantly, rising by 76.9 per cent and 83.5 per cent, respectively, to 2.09 billion units and N52.97 billion.

Deal counts also jumped by more than 52 per cent, indicating that while sentiment was largely cautious, investors continued to scan the market for bargain opportunities, particularly in low-priced and high-volatility stocks.

Also on the price movement chart, stocks such as VFD Group, Union Dicon, ABBEYBDS and FTN Cocoa delivered strong performances, adding 53.9 per cent, 31 per cent, 29.6 per cent, and 18.8 per cent, respectively, driven by speculative buying and momentum-driven trades.

However, these gains were overshadowed by the sharp declines of 20.8 percent, 15.2 per cent, 15 per cent, 12.8 per cent and 11.7 per cent recorded by Royal Exchange, Cornerstone Insurance, SovereignTrust Insurance, Lasaco and CAP, which stood out as the worst performers of the week.

Looking ahead, analysts at Cowry Asset Management Limited believe that the short-term outlook remains cautious, with attention shifting to key macroeconomic indicators.

Investors are eagerly awaiting the release of March CPI data and the Q, 2025 economic performance report, which are expected to provide clearer direction for the economy and risk sentiment.

With the market appearing to be in oversold territory, there is potential for a short-term rebound based on technical.

However, a sustained recovery will likely depend on improvements in macroeconomic fundamentals, clarity in fiscal and monetary policies, and stronger-than-expected corporate earnings. Until then, investors are expected to maintain a defensive stance, favouring value stocks with strong fundamentals, resilient earnings, and attractive dividend yields.

For discerning market participants, the pullback may offer a strategic entry point into fundamentally sound names trading at discounted valuations.

Analysts at Codros Capital said market sentiment is likely to be shaped by a combination of external and domestic factors.

According to them, key among these are developments in the global economy, which continue to cast a shadow over investor confidence; the anticipated release of the March inflation report, which could provide fresh clues about the trajectory of consumer prices and monetary policy; and movements in fixed income yields, which may sway portfolio allocations between equities and bonds.

They added that these elements will play a critical role in determining the level of risk appetite and overall market direction in the near term. (The Guardian, but headline rejigged)