Financial stocks comprising Banking and Insurance as well as stocks in the Oil & Gas sectors emerged as key drivers of activities on the Nigerian Exchange Limited in the week ended September 20, 2024, with investors taking away about N455 billion as gains from their dealings.
Sectoral analysis revealed resilience, particularly in the Banking, Insurance, and Oil & Gas sectors.
The Banking Index led sectoral gains, rising by 1.26 percent week-on-week, driven by strong investor demand. The Insurance sector followed with a 0.86 percent increase, while the Oil & Gas sector posted a marginal 0.02 percent gain.
The Nigerian equities market sustained its upward momentum in the review week, buoyed by consistent buy sentiment as investors reacted favourably to the latest inflation data, which moderated for the second consecutive month to 32.15 percent.
Additionally, quarter-end window dressing activities contributed to the bullish outlook, propelling the NGX All-Share Index (ASI) by 0.81 percent week-on-week, from 97,456.62 points to 98,247.99 points, elevating the market’s year-to-date return to 31.39 percent.
Market capitalization saw a corresponding increase of 0.81 percent, reaching N56.47 trillion and yielding a weekly investor gain of N454.86 billion.
Despite the positive market performance, breadth was slightly negative, with 41 gainers against 40 losers.
Trading activity declined, with average traded volume falling by 28.02 percent to 1.86 billion units, the traded value dropping by 24.92 percent to N38.44 billion, and total deals decreasing by 20.56 percent to 40,211 trades for the week.
Conversely, the Consumer Goods and Industrial Goods sectors experienced setbacks, with declines of 0.77 percent and 0.13 percent, respectively. On the stock level, CAVERTON (+45.3%), FIDELITYBNK (+24.2%), FIDSON (+21.8%), VITAFOAM (+21.5%), and MEYER (+20.9%) emerged as the top gainers for the week, reflecting robust price appreciation. Meanwhile, NNFM (-19.0%), MECURE (-18.2%), TANTALIZER (-14.1%), RTBRISCOE (-12.9%), and NIDF (-9.9%) were among the key laggards, as investors rebalance their portfolios in response to market dynamics.
With the market displaying resilience amid positive macro signals, stock market analysts anticipate continued bullish sentiment this week, driven by portfolio rebalancing and strategic positioning in value-driven stocks.
The recent dip in inflation and favourable quarter-end activities suggest that investor optimism may persist, creating entry opportunities for those seeking fundamentally sound investments.
According to the National Bureau of Statistics, consumer prices eased for the second consecutive month as the high statistical base from the prior year supported performance. Specifically, headline inflation moderated by 125bps to 32.15 percent y/y in August (July: 33.40% y/y).
Analyzing the breakdown, food prices (-201bps to 37.52% y/y) eased to a 7-month low, while core inflation (+11bps to 27.58% y/y) remained at the highest level since March 2004 (32.60% y/y).
On a month-on-month basis, headline inflation slowed by 6bps to 2.22 percent (July: 2.28% m/m), underpinned by the decline in food prices.
However, experts on the platform of Cowry Asset Limited advise caution as market volatility remains a key factor.
“Investors should maintain a focus on quality stocks with strong growth prospects to navigate potential swings effectively,” Cowry said.
Meanwhile, the global equities market rallied in the review week as investors digested a series of policy decisions from the world’s major central banks and their impact on the global economy.
Accordingly, US equities (DJIA: +1.5%; S&P 500: +1.6%) were set for another weekly gain driven by positive reactions to the Fed’s larger-than-expected 50 bps rate cut and the four-month low print in weekly jobless claims, which reinforced expectations that lower borrowing costs could support labour demand without reigniting inflation.
Similarly, European equities (STOXX Europe: +0.4%; FTSE 100: +0.1%) tracked global optimism, heading for a positive close, as investors assessed the Bank of England’s decision to keep interest rates steady, alongside the US Federal Reserve’s rate decision.
Asian markets (Nikkei 225: +3.2%; SSE: +1.2%) posted gains, buoyed by (1) the Bank of Japan’s decision to maintain interest rates, (2) expectations of further stimulus from China, and (3) the positive sentiments surrounding the US Fed’s monetary easing.
Finally, the Emerging Market (MSCI EM: +1.6%) index advanced, driven by gains in China (+1.2%) and India (+1.3%), while the Frontier Market (MSCI FM: -0.1%) index closed lower following the selloffs in Kazakhstan (-0.1%).
