Nigeria’s stock market suffered a sharp decline on Wednesday as heavy profit-taking triggered a broad selloff on the Nigerian Exchange (NGX), wiping out about 3.64 trillion naira (US2.6 billion) in investor wealth.
The downturn reversed gains recorded in the previous two trading sessions, with the NGX All-Share Index falling by 7,668.65 points, or 2.35 percent, to close at 233,074.54 points from 240,743.19 points.
The drop marked one of the market’s steepest single-day declines in recent weeks and reflected growing investor caution following a strong rally that pushed valuations higher.
Market capitalisation fell to 150.85 trillion naira from 154.48 trillion naira as investors moved to secure profits, particularly in highly valued stocks that had recorded significant gains.
Analysts attributed the selloff to widespread profit-taking among both institutional and retail investors who had benefited from the market’s recent upward momentum.
“The magnitude of the decline points to extensive profit-taking across several counters, especially among stocks that have recorded substantial gains in recent months,” a Lagos-based stockbroker said.
Trading activity also weakened, signalling a more cautious approach among investors.
Data from the Nigerian Exchange showed that total traded volume dropped 13.6% to 488.08 million shares from 564.91 million shares in the previous session.
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The value of transactions declined even more sharply, falling 46.8 percent to 20.93 billion naira from 39.35 billion naira, while the number of deals executed dropped 6.1 percent to 46,239 transactions.
The broad-based nature of the decline suggested investors were reassessing their portfolios after the market’s strong performance since the start of the year.
Market operators said investors were becoming more selective as they monitored corporate earnings, economic conditions and future market direction.
Despite the correction, analysts said the medium-term outlook for Nigerian equities remained positive, supported by expectations of improved company earnings, banking sector recapitalisation and continued interest from domestic institutional investors.
However, they warned that further periods of volatility and profit-taking could occur as investors seek to protect gains amid uncertain market conditions.
Attention will now turn to whether bargain hunters return to the market in coming sessions or whether the selloff extends further.
