The Nigerian stock market exhibited an extraordinary bullish sentiment in the week ended January 19, 2024 as investors expressed momentum buying interest in bellwether stocks and those with strong fundamentals.
Consequently, the Nigerian Exchange Limited benchmark index witnessed an unprecedented growth of 13.84 percent week-on-week gain, closing at 94,538.12 points.
This remarkable surge was underpinned by continued funds inflow, reflecting portfolio repositioning in response to recent macroeconomic data indicating nearly a three-decade high in consumer price inflation.
Despite below-average traded volumes, several tickers reached new 52-week highs.
The year-to-date return strengthened to 26.43 percent, up from 11.06 percent the previous week, and the total market capitalization crossed the N50 trillion mark, reaching N51.74 trillion.
Capitalizing on the positive momentum, equity investors accumulated a substantial N6.29 trillion over the five trading sessions.
Across the sectoral front, it was largely bullish across all fronts, except for the banking index which retreated by 0.12 percent week-on-weeks due to price declines in FBNH, GTCO, and STANBIC.
In contrast, the Industrial index outperformed, gaining 46.88 percent week-on-week, driven by price increases and buy interest in DANGCEM, BUACEM, and LAFARGE. Additionally, the Insurance, Oil & Gas, and Consumer Goods Indexes closed the week on a bullish note, rising by 14.94 percent, 8.82 percent, and 8.18 percent, respectively, propelled by positive price movements in NEM, HONYFLOUR, MAYBAKER, ETERNA, and SEPLAT.
Despite the market’s positive performance, participation levels weakened compared to the previous week. Total traded volume declined by 9.44 percent to 5.18 billion units, while the number of trades dipped by 1.31 percent to 79,012 deals. The weekly traded value also showed lackluster movement, dropping by 12.42% to N77.80 billion.
Top-performing stocks at the week’s close included The Initiates (60 percent), DANGCEM (54 percent), HONYFLOUR (51 percent), MAYBAKER (51 percent), and BUACEM (46 percent). Conversely, ROYALEX, MORISON, IKEJAHOTEL, FBNH, and GTCO faced declines in their share prices, shedding 22 percent, 17 percent, 11 percent, 5 percent, and 5 percent, respectively.
Reviewing the market performance, Market Analyst at Cowry Asset Management Limited, warns of an imminent pullback as there appears to be some semblance over valuation of many stocks.
“The ASI’s current movement pattern indicates that the market is persistently in the overbought region according to the RSI, with stock valuations and prices significantly exceeding intrinsic values.
“This signals a potential imminent pullback, suggesting the market requires a correction in the short term,” they stated in their report.
On the prospect of the market this week, they said, “Anticipated market dynamics for the upcoming week include a mix of sentiments, profit-taking activities, and the ongoing presence of bargain hunters, all unfolding against the backdrop of expectations for unaudited Q4 2023 financial results.
“Furthermore, market participants are gearing up for heightened volatility, especially with the Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC) deferring its January meeting until February 26 and 27, 2024. Investors will closely monitor these factors for potential shifts in market conditions.
“Amidst all these, we continue to advise investors to take positions in stocks with consistent track records of dividend payments and strong fundamentals and growth prospects to support earnings growth.”
