Stock market sustains momentum as index increases by 1.42% last week

Riding on 2024 gains, the Nigerian Exchange Limited (NGX) commenced 2025 trading on a positive note, as the all-share index (ASI) recorded 1.42 per cent week-on-week (WoW) gain to close at 103,586.33 points.

At the close of transactions last week, the market capitalisation also appreciated by N402 billion from N62,763 trillion to N63,165 trillion.

This remarkable start underscored sustained investor confidence and optimism, driven by heightened position-taking in blue-chip companies with sound fundamentals, track records of improved earnings and dividend payout.

The positive sentiment was built on the momentum of its impressive performance in 2024, during which it achieved a 38 per cent yearly gain.

Operators said last week’s rally was primarily supported by significant buying interest across key sectors, notably the insurance and consumer goods sectors.

According to them, investors are positioning themselves strategically ahead of potential earnings growth and anticipated interim dividend announcements for 2024.

Besides the market capitalisation N402 trillion weekly gain, the market also recorded an impressive N1.25 trillion in value.

The gain underscored the resilience of Nigerian equities, even amidst persisting economic challenges.

Also, medium to large capitalised stocks were particularly instrumental in driving this performance, reflecting their strong demand.

Trading activities were strong last week with weekly traded volume rising by 88.8 per cent to 2.62 billion shares valued at N69.7 billion.

The transactions were executed through 47,953 deals representing a 43.5 per cent increase from the previous week.

The positive sentiments were spurred by gains in BUA Foods (+5.1 per cent), MTNN (+3.1 per cent), and Lafarge WAPCO (+3.6 per cent). As a result, the year-to-date (YTD) returns settled at 0.6 per cent.

On the sectoral performance, four of the five major indices closed higher. For instance, the NGX-Insurance sector dominated with 26.9 per cent increase, propelled by price appreciation in Prestige Assurance, Sovereign Trust and Coronation Insurance, followed by the NGX consumer goods with 2.2 per cent gain driven by positive sentiments in Tantilizers Plc.

The NGX-banking, and NGX-industrial goods indices also recorded gains of 0.6 per cent and 0.5 per cent, respectively buoyed by increase investors’ appetite in Multiverse, Honeywell Flourmills, Sterling Bank and Wema Bank.

However, the NGX-oil and gas index emerged as the only loser, shedding 0.5 per cent, occasioning sell-offs in Total, Eterna and Oando.

Reacting to market performance, analysts at Cowry Asset Management Limited said: “This robust start to 2025 underscores the growing appeal of the Nigerian exchange as a hub for portfolio diversification. Sectors such as insurance, banking, consumer goods, and industrial goods saw notable investor interest, with a focus on stocks poised to deliver substantial returns in the near term.

“Looking ahead, market sentiment remains bullish, although some profit-taking could moderate gains in the short term. Overall, the outlook for 2025 is optimistic, with expectations of sustained investor confidence and market resilience. Thus, we continue to advise investors to take a position in stocks with strong fundamentals.”

Codros Capital said: “As the new year unfolds, we anticipate heightened market volatility with a bullish tilt, driven by ongoing portfolio rebalancing activities as investors respond to evolving macroeconomic conditions, shifting market sentiment, and position for the earnings season ahead.”

Analysts at Vetiva Dealings and Brokerage said: “Given the limited changes to the catalysts of sell-side pressure in the market, we anticipate another positive session on Monday (today), as investors hunt for attractive offers across the market.”