The Nigerian capital market posted an impressive recovery last week, reversing prior weeks’ losses as investors’ wealth rose by N794 billion. This marked a notable turnaround despite two negative trading sessions out of five last week.
The market capitalisation of listed equities, which stood at N62,851 trillion as of January 17, closed at N63,645 trillion on January 24, adding N794 billion.
Similarly, the all-share index (ASI) rose by 1,244.62 points or 1.2 per cent, closing at 103,598.3 points compared to 102,353.68 points it closed the previous week.
Last week’s positive sentiment was driven by several factors, including bargain hunting in MTNN, which surged by 6.4 per cent following the NCC’s approval of a 50 per cent tariff hike for telecommunication services. Additionally, Transcorp Power appreciated by eight per cent after releasing positive earnings and declaring dividends.
Investors’ optimism was further fueled by anticipation of fourth-quarter scorecards and full-year 2024 earnings reports, alongside dividend announcements from listed firms. The trading activity also recorded significant improvement, with total traded volume and value increasing by 35.7 per cent and 27.9 per cent respectively.
A total of 3.06 billion shares worth N75.2 billion were traded last week, compared to 2.3 billion shares valued at N58.8 billion in the prior week. On the sectoral performance, three out of six sectors closed in positive territory. NGX Banking Index was the most active sector, gaining 4.09 per cent, driven by strong performances from Fidelity Bank and UBA.
NGX Commodity Index followed with 1.03 per cent, reflecting a growing interest in the newly introduced index. The NGX Industrial Index also trailed with 0.1 per cent gain, spurred by price appreciation in RT Briscoe, CAP Plc and Transcorp Power.
On the downside, the NGX Insurance Index led the decliners with a 1.3 per cent drop due to sell-offs in SUNU Assurances and Cornerstone Insurance. NGX Consumer Goods Index declined by 1.2 per cent, occasioned by losses in Honeywell Flour Mills and Dangote Sugar Refinery.
NGX Oil and Gas Index also fell by 0.75 per cent amid sell-offs in Aradel Holdings and Eterna Further breakdown of last week’s trading showed that the financial services industry dominated activity, contributing 74.6 per cent of the total equity turnover volume with 2.3 billion shares worth N33 billion traded in 27,100 deals.
The services and consumer goods industries followed, accounting for 284.9 million shares worth N807.6 million and 139 million shares valued at N5.7 billion, respectively.
Top trades by volume included Wema Bank, Secure Electronic Technology and Access Holdings, collectively contributing 45.9 per cent to the total turnover with 1.4 billion shares worth N15.4 billion.
On market outlook, analysts expect the positive momentum to continue, bolstered by the release of corporate earnings and accompanying dividend declarations.
Cordros Capital noted that the commencement of the 2024 full-year earnings season will likely act as a catalyst for buying activities and improved market sentiment.
“While the current low valuation of many stocks presents opportunities for strategic repositioning, bouts of volatility may occur as macroeconomic data and upcoming economic events influence investor sentiment,” it stated.
Cowry Asset Management Limited also expressed optimism about continuing the positive market sentiment in the coming week, driven by the ongoing release of corporate earnings and anticipated corporate actions.
According to them, the results published so far have encouraged laying a solid foundation for sustained price support and attracting fresh capital inflows into the market. They added that the prevailing low valuation of many stocks presents lucrative opportunities for investors to buy into value and strategically reposition their portfolios.
However, they cautioned that the market could face some volatility as the earnings season unfolds.
