Nigerian stocks extended their losing streak to a seventh consecutive trading session on Friday, as the All-Share Index declined by 0.3% to settle at 98,500 points. Despite the sustained slide, market analysts at Meristem Securities described the pullback as a healthy correction following a prolonged rally that had pushed valuations to elevated levels.
Market Performance and Key Drivers
The benchmark index shed approximately 300 points during Friday's trading, bringing the total decline over the seven-day period to about 2.1%. The sell-off was led by profit-taking in banking and consumer goods stocks, with tier-one lenders such as Zenith Bank and Guaranty Trust Holding Company recording losses of 1.2% and 0.9% respectively. On the consumer goods front, Nestlé Nigeria and BUA Foods each fell by more than 1%.
According to the Nigerian Exchange Limited (NGX) daily report, market capitalisation dipped by NGN 145 billion to close at NGN 56.3 trillion. Trading activity remained subdued, with total volume of shares traded falling to 320 million units, down from 380 million units the previous day. The number of deals also declined, dropping to 7,800 from 8,200.
Analyst Perspective on the Correction
In a note to clients, Meristem Securities stated that the current pullback is not a cause for alarm but rather a necessary recalibration. The firm noted that the NGX All-Share Index had surged by over 30% in the first half of the year, driven largely by strong corporate earnings and renewed investor confidence following policy reforms. The correction, they argued, allows the market to consolidate gains and reduces the risk of a sharper downturn.
“We view this as a healthy consolidation phase. The market had become overbought after an extended rally, and profit-taking is a natural part of the cycle. Investors should see this as an opportunity to rebalance portfolios rather than a signal to exit,” said a Meristem Securities analyst in the report.
Sectoral Breakdown and Investor Sentiment
Across sectors, the NGX Banking Index fell by 0.8%, the NGX Consumer Goods Index dropped 0.6%, and the NGX Industrial Index edged down 0.2%. The NGX Oil & Gas Index was the only major sector to close in positive territory, gaining 0.1% on the back of a slight uptick in Seplat Energy shares.
Foreign investor participation remained low, accounting for just 12% of total trading volume, according to NGX data. Domestic institutional investors were the primary sellers, while retail investors showed mixed activity. Analysts at CardinalStone Partners commented that the sell-off is largely driven by short-term traders locking in profits, rather than any fundamental deterioration in the economic outlook.
Outlook and Next Steps
Market participants are now looking ahead to the release of second-quarter GDP data and corporate interim results for further direction. The Central Bank of Nigeria's upcoming monetary policy committee meeting is also expected to influence sentiment, as any rate decision could impact bond yields and equity valuations. According to the Meristem note, the correction is likely to continue in the short term but should stabilise once valuations align with fundamentals, providing a base for the next leg of the rally.
