The Nigerian stock market faced a downturn last week, as surging petrol prices added pressure to an already fragile economy. Petrol prices spiked to unprecedented levels, ranging from N855 to N1,000 per litre, up from around N600 per litre, sending shockwaves through the private sector. Businesses across the country have expressed concern over the negative impact of these increases, with many warning that it could lead to higher operational costs, reduced profitability, and potential layoffs.
The stock market, which often reflects the health of the broader economy, responded negatively to these developments. The Nigerian Exchange Limited (NGX) All-Share Index (ASI) saw a decline of 0.2%, closing the week at 96,433.53 points compared to the previous week’s 96,579.54 points. In addition, market capitalisation fell by N83 billion, closing at N55.394 trillion, down from N55.477 trillion.
Leading the downward trend were major players like Dangote Sugar, which experienced a 5.5% drop in share price due to profit-taking activities. Other notable decliners included Zenith Bank (-2.0%) and WAPCO (-3.5%), contributing to the overall bearish sentiment in the market.
Despite this, the Year-to-Date (YtD) return remains positive at +29.0%, although activity levels have dropped significantly. Total trading volume and value fell by 23.7% and 3.3% week-on-week, respectively, indicating a more cautious approach from investors.
Across various sectors, performance was mixed. The Insurance Index suffered the largest decline, falling by 4.5%, followed by the Consumer Goods Index, which dropped by 1.2%. The Industrial Goods Index and Banking Index also saw slight declines of 0.2% and 0.1%, respectively. On the other hand, the Oil and Gas Index rose by 1.5%, buoyed by the surge in petrol prices.
Economic analysts have pointed out that the government’s fiscal and monetary policies have yet to create meaningful improvements in the economy. The recent surge in energy costs is adding to the burden on businesses and consumers alike, compounding existing economic challenges. Many are calling for more decisive action from the government to stabilize the market and foster sustainable growth.
Looking ahead, market analysts at Cordros Research expect a cautious trading environment this week, with investors likely to engage in selective buying. They also anticipate continued profit-taking in stocks that have seen significant price gains in recent weeks.
InvestData Consulting analysts also foresee mixed market sentiment, driven by bargain hunting and expectations of interim dividend payouts from banks as they release their half-year financial results. Investors are expected to continue repositioning their portfolios to take advantage of price pullbacks and find value in the midst of market volatility.
As the Nigerian economy grapples with rising petrol prices and uncertainty, the stock market’s performance will likely remain erratic. Investors are urged to stay informed and take advantage of market corrections to maximize potential gains, even as the broader economy awaits more substantial reforms.
