Bamidele Famoofo
Last week in the Nigerian stock market, the bulls maintained a firm grip, driven by widespread optimism that created buying opportunities for market participants. This positive market breadth was bolstered by the release of favourable macroeconomic data, which suggests a promising trajectory for the economy.
In response, equity investors engaged in sector rotation and portfolio reshuffling, focusing on high-quality stocks with strong fundamentals and encouraging chart patterns.
The benchmark All-Share Index of the market registered a 0.63 percent increase on a week-on-week basis, surpassing the 96,000 psychological thresholds to close at 96,579.54 points.
This upward movement signifies a gradual return of strength to the market, despite the index remaining below both the 50-day Exponential Moving Average (EMA) and the 50-day Simple Moving Average (SMA), amidst evolving market fundamentals and technical indicators.
The market capitalisation of traded equities rose by 0.63 percent week-on-week, reaching N55.48 trillion, driven by positive price movements across various sectors.
Consequently, investors realised a profit of N348 billion in weekly gains, as the exchange recorded a total of 56 advancing stocks compared to 26 that experienced price declines.
The year-to-date return of the exchange now stands at 29.16 percent. Market momentum was strong, fuelled by buying interest across small, mid, and large cap stocks with solid fundamentals. As a result, the weekly trade value surged by 55.3 percent week-on-week to N51.34 billion, although the weekly trading volumes declined by 52.4 percent to 2.69 billion shares, all executed in 47,877 deals—a 14 percent increase from the previous week.
Across the sectoral spectrum, performance was bullish, with all five sectors under observation closing in positive territory. The NGX Oil & Gas and NGX-Insurance indices led the charge with weekly gains of 8.55% and 6.10%, respectively, driven by buying interest in stocks such as OANDO, ETERNA, TOTAL, SOVRENINS, CORNERSTONE, and UNIVINSURE.
The NGX Consumer Goods, NGX Banking, and NGX-Industrial Goods indices also reported notable gains of 3.5 percent, 1.60 percent, and 0.04 percent respectively, buoyed by positive price movements in OKOMUOIL, MCNICHOLS, INTBREW, FBNH, JULIUS BERGER, BERGER, and ETI. At the close of the week, stocks like OANDO (61%), DEAPCAP (57%), MCNICHOLS (57%), DAARCOMM (55%), and NSLTECH (54%) emerged as the top gainers, drawing significant investor attention.
Conversely, TRANSPOWER (-10%), MTNN (-10%), UPL (-9%), UNITED CAPITAL (-8%), and EUNISELL (-6%) were the week’s laggards, as investors offloaded these stocks as part of a broader portfolio rebalancing exercise. Looking ahead to the coming week, it is expected that the prevailing market sentiment will continue to dominate the local bourse, with position-taking and portfolio reshuffling likely to intensify ahead of the September trading month.
From a technical perspective, the NGX is showing signs of recovery, as indicated by the candlestick formations and momentum indicators, with equity investors poised to capitalise on pullbacks to acquire value stocks. Nevertheless, we continue to advise investors to focus on fundamentally sound stocks.
Global equities
Optimism over potential interest rate cuts kept major global stock indices higher early in the week. However, sentiment wavered later in the week as the focus shifted to the upcoming Personal Consumption Expenditure (PCE) price index data today (Friday), for further clues on the future path of rate hikes. At the time of writing, mixed sentiments dominated US equities (DJIA: +0.4%; S&P 500: -0.8%) as reactions to the revised GDP data helped offset Nvidia’s sharp post-earnings dip.
Meanwhile, European equities (STOXX Europe: +1.6%; FTSE 100: +1.0%) are set to close higher as cooling Eurozone inflation cemented expectations of a September rate cut by the European central bank. In Asia, Japanese stocks (Nikkei 225: +0.6%) posted gains as the yen’s weakness benefited export-oriented companies, while Chinese stocks (SSE: -0.4%) fell due to steep losses in tech stocks.
The Emerging Markets (MSCI EM: -0.5%) and Frontier Markets (MSCI FM: -0.4%) indices also declined, weighed down by losses in China (-0.4%) and Vietnam (-0.1%), respectively.
