Trading activities on the floor of the Nigerian Exchange Limited (NGX) closed negative on Wednesday as bearish sentiments drove the domestic bourse following the release of February 2023 inflation data by the National Bureau of Statistics (NBS). 

Market analysts also attributed the drop to profit takings and delay in the release of corporate earnings, especially from the bank firms. 

Market performance: Activities on the local bourse showed that the negative sentiment recorded Wednesday makes it the fourth successive session of decline. 

 Selloffs in Zenith Bank Plc which dropped by -4.60%, GTCO which recorded a -0.79% decrease and Geregu Power Plc with a 6.46% decline reinforced the market’s weak performance at the close of trading.  

As a result, the year-to-date (YTD) return fell to 8.27%, while the market capitalization declined by N127 billion to close at N30.23 trillion. 

Further analysis of the day’s market activities showed trade turnover settled higher relative to the previous session, with the value of transactions up by 21.02%. A total of 181.19 million shares valued at N3.41 billion were exchanged in 3,908 deals. GTCO with a -0.79% loss led the volume and value charts with 33.85 million units traded in deals worth N841.95 million. 

What market analysts said: Reacting to the development, the Managing Director of Arthur Steven Asset Management Limited, Mr Olatunde Amolegbe, told Nairametrics that the drop can be attributed to the report by that NBS which showed that the inflation rate has started to climb again after of few months of modest movement. 

He noted that this might make the MPC continue its hawkish stance regarding interest rates at its next meeting. 

He also linked the development to profit-taking after a relatively long bullish trend since the beginning of the year and delays in the release of results and corporate actions by the banks which according to him make up 60% of the entire market capitalization. 

The inflation report: According to the NBS, Nigeria’s headline inflation rate rose to 21.91% in February 2023 compared to 21.82 per cent recorded in the preceding month of January. This marked an increase of 0.09% points when compared to January 2023 headline inflation rate. 

Similarly, on a year-on-year basis, the headline inflation rate was 6.21% points higher compared to the rate recorded in February 2022, which was 15.70%. 

This shows that the headline inflation rate, year-on-year basis, increased in February 2023 when compared to the same month in the preceding year of February 2022. 

According to the NBS, on a month-on-month basis, the percentage change in the All-Items Index in February 2023 was 1.71%, which was 0.16% points lower than the 1.87% recorded in January 2023.