The Nigerian Stock Market lost heavily on Tuesday as investors dumped stocks in droves for the second day running. The Stock Market All Share Index fell by whopping 1.1%, the biggest one day loss since December 2017.
In fact, as at 30 minutes to the close of trading stocks were down 2.6% and was on track be the worst since July 2017.
All red
Signs that stocks were going to skid into losses appeared during pre-markets as investors offered more shares for sales against fewer bids. The negative trends were sustained mostly throughout trading with losses widening just after midday.
January 23, 2018
A cross-section of some of the biggest losers include stocks that had recorded some of the most gains this year. For example, Fidelity bank, FCMB, First bank, Transcorp and Diamond Bank have all gained 45%, 129.7%, 48%, 46% and 115% respectively year to date. Theses stocks have contributed in no small measure to the 17% year to sate gain recorded by the stock market this year.
Reason for the losses
From above the pattern above, stocks skidded into losses because investors have started taking some profits. It is non uncommon for stocks to pull back after a sustained rally of more than 10 days. Stocks have recorded gains 11 times out of 15 days of trading this year alone and 22 times out of 33 days of trading since December 2017.
Will the bulls be back?
This is still January and it is unlikely that the losses will persist. Corporates are yet to release their 2017 Full year results which are expected be much better than 2016. Positive sentiments around the world is also likely to remain sustained in the first quarter of 2018 with oil prices still above $70.
It is also important to note that downside risk remain a threat if you consider the recent threat by the Niger Delta Militant Group, Niger Delta Avengers and the persistent fuel scarcity in the country.
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