Profit-taking halts rally as NGX slips after record run

AFTER a strong rally that pushed the Nigerian stock market to historic highs, trading on Tuesday reflected a natural pause as investors moved to secure profits from the recent surge.

The shift in sentiment triggered widespread sell-offs across key counters, pulling the Nigerian Exchange Limited (NGX) All-Share Index (ASI) down by 0.48 percent. The decline ended the multi-day bullish run and signalled a technical correction after the market crossed the 190,000-point milestone.

At the close of trading, the ASI settled at 189,362.94 points, while total market capitalisation fell to N121.552 trillion. The retreat came as investors rebalanced their portfolios in anticipation of upcoming corporate earnings and fresh market data.

Despite the dip, market breadth remained relatively balanced. Forty-four stocks recorded gains, while 40 closed in the red. A total of 1.199 billion shares worth N60.19 billion were traded in 86,607 deals, reflecting sustained activity even as prices softened.

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MTN Nigeria led the decliners, shedding N29.70 per share. It was followed by Skyway Aviation Handling Company, which dropped N13, Mecure with a loss of N10.40, Zenith Bank, down N8.95, and Lafarge Africa, which declined by N8.

The pullback came after the market briefly pushed above the 190,000-point mark, a psychological and technical level that had capped earlier advances. Analysts described Tuesday’s drop as a routine correction after an extended rally rather than a reversal of the broader bullish trend.

Before the session, Lagos-based Vetiva Research said the market’s recent strength had been driven by a mix of fresh pension fund inflows and strong earnings expectations from listed companies.

According to the firm, large institutional investors had been increasing exposure to high-cap stocks, reflecting confidence in the market’s medium-term outlook. However, Vetiva warned that some segments are showing signs of overheating.

From a quantitative perspective, the analysts noted that the Oil and Gas Index had posted extreme year-to-date returns, placing it firmly in overbought territory. This, they said, increased the likelihood of short-term volatility as traders reassessed valuations.

They added that the next trading session would test investors’ conviction, as the market weighed profit-taking against the broader optimism surrounding earnings performance and liquidity conditions.

Although the day ended in the red, total market capitalisation remains close to the N122 trillion mark, underscoring how significantly the Nigerian equities market has expanded in recent years. Market watchers say the long-term trajectory still points upward, even as short-term corrections emerge along the way.

Recommended stocks

Meanwhile, there are 25 stocks recommended by analysts. These include the following:

Meristem Research: Aggressive growth focus

Meristem Research says short-term volatility is likely to persist, but improving company fundamentals should support returns over the medium term. The firm’s aggressive growth portfolio is tilted towards small- and mid-cap stocks with strong earnings prospects.

Meristem’s key recommendations include AIICO Insurance, BUA Cement, Fidson Healthcare and First Holdco.

Other stocks favoured by Meristem are Mutual Benefits Assurance, MTN Nigeria, NASCON and NEM Insurance.

The firm also highlights UACN, UBA, Unilever Nigeria, Vitafoam, Lafarge Africa, Wema Bank and Zenith Bank as strong long-term investment candidates.

CardinalStone: Frontier market optimism

CardinalStone Research believes Nigeria could benefit from renewed foreign inflows if the country is reclassified as a Frontier Market by FTSE Russell in 2026.

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The firm’s recommended stocks include: Access Holdings, Airtel Africa, Dangote Cement, Fidelity Bank, GTCO, MTN Nigeria, Presco and Seplat Energy.

Other CardinalStone picks are Stanbic IBTC, Transcorp, UBA, Unilever Nigeria, Lafarge Africa and Zenith Bank.

United Capital: Value and upside plays

United Capital Research has advised investors to buy Sterling Financial Holdings, citing a target price of N10.

Other stocks recommended by United Capital include Access Holdings, Aradel Holdings, United Bank for Africa, FCMB Group, Transcorp, Julius Berger Nigeria and Nestlé Nigeria.

The firm also recommends Zenith Bank, C & I Leasing, AIICO Insurance, Dangote Cement, BUA Cement, AXA Mansard, Transcorp Power, MTN Nigeria and Mutual Benefits Assurance. In addition, United Capital has Lafarge Africa, Wema Bank, PZ Cussons Nigeria and Seplat Energy on its buy list.

Futureview: banking and industrial bias

Futureview Research maintains a strong preference for banking stocks, led by GTCO. Other bank stocks recommended by Futureview are Fidelity Bank, Access Holdings, UBA, Zenith Bank and Sterling Financial Holdings.

Outside the banking sector, Futureview favours Nigerian Breweries, Unilever Nigeria, Honeywell Flour Mills, Dangote Cement, Lafarge Africa, Beta Glass, MTN Nigeria, Airtel Africa, NEM Insurance, AXA Mansard and Transcorp.