Nigerian equities fell for a third consecutive week despite headline inflation easing for a fourth straight month, a divergence that points to profit-taking rather than any reappraisal of the macroeconomic outlook. The benchmark All-Share Index shed 0.33 per cent week-on-week to close at 247,539.73 points last Friday, down from 248,363.55 points a week earlier. Market capitalisation fell by N534 billion to N160.725 trillion, and the year-to-date return moderated to 59.07 per cent.
The decline is modest in the context of the year’s performance. The index is still up nearly 60 per cent since January, having crossed the 250,000-point mark in the final week of September and peaked above 255,000. September itself closed positive, with the ASI rising 2.87 per cent from 244,199.39 points at the end of August to 251,211.67 points, adding about N5.37 trillion in market value.
That rally explains the current pullback. The index had climbed more than 60 per cent year-to-date by late September, driven by a 350-basis-point cut in the Monetary Policy Rate to 23 per cent, the reclassification of Nigeria from unclassified to frontier market status by FTSE Russell effective September 21, and heavy positioning in tier-one banking stocks. Institutional investors with large capital gains began booking profits once the index crossed the psychological 250,000 level, and the selling has been concentrated in the same large caps that powered the run.
Zenith Bank lost 6.5 per cent over the week, MTN Nigeria fell 1.8 per cent, First HoldCo declined 3.9 per cent and GTCO dropped 4.4 per cent. Those four stocks accounted for most of the index decline, and the banking index fell 3.1 per cent. Insurance slipped 0.1 per cent, while oil and gas gained 3.1 per cent and consumer goods added 0.1 per cent. The industrial goods index closed flat, and market breadth was positive, with 49 gainers against 29 decliners, suggesting the weakness was concentrated rather than broad.
Trading activity thinned considerably. Volume fell 39 per cent week-on-week and value dropped 38 per cent, with 1.659 billion shares worth N98.088 billion exchanged in 184,632 deals, compared with 2.715 billion shares valued at N158.28 billion in 209,986 deals the previous week. The drop in turnover alongside a modest index decline is consistent with a market in consolidation rather than one in retreat.
Inflation data released by the National Bureau of Statistics on October 15 gave the market little reason to sell. Headline inflation eased to 14.63 per cent in September from 15.39 per cent in August and 20.98 per cent a year earlier, a 76-basis-point decline. Month-on-month inflation slowed sharply to 0.06 per cent from 0.71 per cent, and food prices fell 1.55 per cent month-on-month, driven by lower prices for rice, tomatoes, onions, maize flour and plantains. Food inflation stood at 19.59 per cent year-on-year, while core inflation, which excludes volatile food and energy prices, was 12.95 per cent, down from 22.11 per cent in September 2025.
The disinflation has been helped by the Central Bank’s rate cut and by a stronger naira, but it has not yet translated into a decisive shift in equity pricing. Part of the reason is that energy costs remain elevated, with petrol and diesel prices still far above their pre-2023 levels, and the CPPE has warned that rising energy costs could reverse the gains. Part of it is also structural. Bank recapitalisation raised more than N1.1 trillion through rights issues and public offers in the past year, increasing the supply of bank shares and compressing earnings per share even as balance sheets strengthened.
The Dangote Petroleum Refinery initial public offering has added another layer. The offer of 4.1 billion shares at N525 each, which opened on September 14 and has been extended to October 27, has drawn subscriptions from investors in more than 90 countries. Domestic pension funds and retail investors have moved cash out of secondary-market holdings to position for the listing, reducing buying power in the secondary market and contributing to the softness in large caps.
Foreign participation remains weak. Foreign investors recorded a net outflow of N266.07 billion from the equities market between January and July 2026, with inflows of N513.36 billion against outflows of N779.43 billion, according to NGX data. In August, foreign investors accounted for just 4.89 per cent of equity transactions, while domestic investors accounted for about 89.77 per cent of turnover in the first eight months of the year.
Cordros Securities expects sentiment to improve, citing bargain hunting after recent price declines and positioning ahead of third-quarter earnings releases and dividend qualification dates. InvestData Consulting has pointed to oil price movements as a factor that could shape expectations around inflation, energy costs and broader economic activity, while cautioning that the effect will vary by company depending on exposure to energy prices and the ability to pass on costs.
For now, the market is doing what markets do after a long rally. It is pausing, taking profit and waiting for the next set of earnings to justify the valuations it has already priced in.