Analysts have said trading activities on the Nigerian stock market will be driven by the outcome of the Monetary Policy Committee (MPC) meeting.
The MPC is expected to hold its first meeting of the year on the 24th and 25th of January 2022.
Analysts expect the Committee to assess global growth prospects for the year within the context of rising cases of the Omicron variant amid the ongoing unwinding of monetary stimulus by global central banks.
On the domestic front, they expect that the uptick in headline inflation in December will likely stir up a debate among Committee members about whether it was a blip or a trend that will persist in the coming months, saying, “all in, we expect the Committee to retain the MPR at 11.5 per cent alongside other monetary policy parameters.”
In the week ahead, analysts at Cordros Securities Limited believe investors will be focused on the outcome of the MPC meeting to gain further clarity on the movement of yields in the fixed income (FI) market.
“Consequently, we expect a ‘choppy theme’ as cautious trading will likely dominate the market. Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the weak macro story remains a significant headwind for corporate earnings,” they stated
In the new week, analysts at Cowry Assets Management Limited expected the equities market index to move northward amid positive investor’s sentiment, saying, investors are expected to invest more in the equities market if MPC holds rate constant.
The chief operating officer of InvestData Consulting Limited, Mr Ambrose Omordion said: “we expect a mixed sentiment to continue on positioning in fundamentally sound stocks and profit taking, as rallying oil price support economic and market fundamentals. Also, investors are targeting dividend paying stocks as they reposition portfolio ahead of fourth quarter (Q4), 2021 and full-year audited earnings reports that may start hitting the market any moment from now.”
He added that “with all eyes on MPC meeting outcome, as inflation reversed up to 15.62 per cent and other economic data. Even as many stocks are trading within their buy ranges, a situation expected to attract more funds into the stock market, given the dividend yield capable of serving as a hedge against inflation.”
Last Week’s Trading Activities
The stock market last week sustained its positive trajectory as Dangote Cement completed its share buy-back programme of 107 million share units. The All-Share Index up week-on-week (W-o-W) by 3.38 per cent to close at 45,957.35 points. Also, market capitalisation rose W-o-W by N810 billion to close at N24.761 trillion.
Given the bullish sentiment, most sector gauges tracked closed in green. Particularly, the NGX Oil & Gas, NGX Banking, NGX Consumer Goods index and the NGX Industrial indices rose by 5.21 per cent, 1.66 per cent, 1.03 per cent and 4.37 per cent respectively to close at 379.17 points, 419.14 points, 564.47 points and 2,178.09 points respectively. On the flip side, the NGX Insurance index lost 0.24 per cent to close at 192.71 points.
The market breadth for the week was positive as 47 equities appreciated in price, 23 equities depreciated in price, while 86 equities remained unchanged. Courteville Business Solutions led the gainers table by 24.32 per cent to close at 46 kobo, per share. Northern Nigeria Flour Mills (NNFM) followed with a gain of 20.61 per cent to close at N7.90, while Eterna went up by 13.19 per cent to close to N6.35, per share.
On the other side, Veritas Kapital Assurance and Regency Assurance led the decliners table by 8.70 per cent each to close at 21 kobo and 42 kobo, respectively, per share. NEM Insurance followed with a loss of 6.57 per cent to close at N3.70, while Transnational Corporation of Nigeria (Transcorp) declined by 5.26 per cent to close at N1.08, per share.
Overall, a total turnover of 1.858 billion shares worth N47.486 billion in 20,861 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 1.600 billion shares valued at N32.716 billion that exchanged hands previous week in 22,607 deals.