The Nigerian equities market suffered a major setback on Wednesday as renewed profit-taking activities triggered a sharp selloff across the Nigerian Exchange (NGX), wiping out N3.64 trillion in investor wealth and reversing gains recorded in the previous two trading sessions.

The bearish sentiment pushed the NGX All-Share Index (ASI) down by 7,668.65 basis points to close at 233,074.54 points from 240,743.19 points, representing a decline of 2.35 per cent. The steep drop marked one of the market’s sharpest single-day declines in recent weeks and underscored growing investor caution following the market’s recent rally.

Consequently, total market capitalization declined to N150.85 trillion from N154.48 trillion, reflecting a loss of approximately N3.64 trillion in value as investors moved to lock in profits amid concerns over stretched valuations in some highly capitalized stocks.

Market analysts attributed the downturn to widespread profit-taking by institutional and retail investors who had benefited from the strong upward momentum recorded earlier in the week. The selloff erased much of the recovery achieved during the previous sessions and signaled a return of bearish sentiment across major sectors of the market.

The decline was accompanied by weaker trading activity, indicating that investors adopted a more cautious approach amid the sharp correction.

Data from the exchange showed that total traded volume fell by 13.6 per cent to 488.08 million shares compared with 564.91 million shares traded in the previous session. Similarly, the value of transactions plunged by 46.8 per cent to N20.93 billion from N39.35 billion, highlighting reduced appetite for risk assets.

The number of deals executed on the exchange also dropped by 6.1 per cent to 46,239 transactions from 49,230 deals recorded earlier, further reflecting subdued market participation.

Market operators noted that the broad-based nature of the selloff suggests investors are becoming increasingly selective as they reassess portfolio positions following the market’s strong performance since the beginning of the year.

“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. “Investors appear to be taking a wait-and-see approach ahead of fresh corporate disclosures and macroeconomic developments.”

Despite the day’s losses, analysts maintain that the medium-term outlook for equities remains positive, supported by expectations of stronger corporate earnings, ongoing banking sector recapitalisation efforts, and sustained interest from domestic institutional investors.

However, they cautioned that intermittent bouts of profit-taking could persist in the near term as investors seek to preserve gains amid heightened market volatility.

With market turnover weakening and sentiment turning negative, investors will be watching closely to see whether bargain hunters return to the market or if the correction extends into subsequent trading sessions.

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