After two consecutive positive trading sessions, Nigerian equities suffered a reversion yesterday as investors resumed trading from the Independence Break declared on Monday, by seeking to take profits made in previous sessions.
This action by investors burdened market capitalisation with N18 billion loss to close at N9.715 trillion and the NSE All-Share Index (ASI) also lost 51.41 points to close at 28,283.99 basis points, leaving the market with 0.18 per cent depreciation.
The session also witnessed a negative breadth as 17 losing stocks emerged against 11 gaining ones and 10 others that closed on flat prices.
Speaking with Daily Trust on what occasioned the recorded plummet in stock value; brokers explained that if there was an unexpected decline in a stock or equity index that has been rising in the previous sessions, and no specific reason for the drop can be identified, the decline is frequently attributed to profit taking.
Experts believe that financial markets could receive a welcome boost this week if the combination of easing Deutsche Bank concerns and rising oil prices bolster investor risk sentiment. Asian stocks have already commenced Tuesday on a firm footing following Yen’s weakness which propelled the Nikkei into gains.
The Naira tumbled lower against the Dollar this week following positive economic data from the United States which renewed expectations over the Federal Reserve raising US interest rates this year.
According to Lukman Otunuga, A financial analyst with FXTM: “ It seems that the local currency remains exposed to external risk as the horrible combination of oil price volatility and Dollars resurgence entices sellers to install repeated rounds of selling. With sentiment towards the Nigerian economy bearish in the short term, further declines could be expected as the natural forces of supply and demand determine the local currencies equilibrium value. From a technical standpoint, the Naira is bearish and this lack of buying sentiment could pave a path towards 500 against the Dollar on the black market exchange”
