MPC’s decision spurs stock market, records N737.9bn gain last week

The stay action applied by the Central Bank of Nigeria (CBN)’s Monetary Policy Committee (MPC) on monetary parameters may have increased investors’ confidence as the Nigeria Stock Exchange (NSE) returned to gaining ways last week, adding N737.9 billion to market capitalization.

Last week, the CBN held its first monetary policy committee (MPC) meeting for the year on the backdrop of dampened optimism for improvement in global output recovery, associated with the resurgence of the COVID-19 pandemic and mild success with vaccinations across several countries.

At the end of the 2-day meeting, the MPC voted to retain all monetary parameters.

“We believe this decision is positive and much in line with our firm view as an extension of the current monetary easing would be supportive of the expected recovery in the domestic economy.

“We believe this provides clarity for the market and should drive increased activities in the equities market while we expect fixed income traders to remain active at the short end of the market”, said analysts at Afrinvest.

The domestic equities market reversed last week’s bearish sentiment, posting a positive performance following gains on all trading sessions. Accordingly, the NSE All Share Index (ASI) rose 3.4 per cent week-on-week (w/w) to settle at 42,412.66 points on the back of buying interest in AIRTELAF (+9.2 per cent), MTNN (+6.5%) and WAPCO (+15.4%).

Similarly, Year-to-Date (YTD) return improved to 5.3 per cent while market capitalisation advanced N737.9 billion w/w to close at N22.2 trillion. Activity level strengthened as average volume and value rose 20.6 per cent and 14.4 per cent to 514.0 million units and N5.6 billion respectively. The top traded stocks by volume were TRANSCORP (228.3 million units), ZENITH (117.3 million units) and UBA (97.2 million units) while AIRTELAF (N3.2 billion), ZENITH (N3.1 billion) and GUARANTY (N2.2 billion) led by value.

Performance across sectors was largely bullish as five of six indices under our coverage trended northward w/w. The AFR-ICT and Banking indices advanced 7.8 per cent and 3.3 per cent respectively on the back of buying interest in AIRTELAF (+9.2%), MTNN (+6.5%), GUARANTY (+4.2%) and ZENITH (+2.6%).

Trailing, the Insurance and Industrial Goods indices rose 1.7 per cent and 1.4 per nt respectively on account of gains in AIICO (+7.7%), MANSARD (+9.4%) and WAPCO (+15.4%).

Similarly, investors took position in FLOURMILL (+8.4%), DANGSUGAR (+5.2%) and NIGERIAN BREWERIES (+3.3%), resulting in an increase of 1.3 per cent in the Consumer Goods index. Conversely, the Oil & Gas index was the lone laggard, down 7.2 per cent due to sell-offs in SEPLAT (-9.3%), MOBIL (-8.6%) and ARDOVA (-7.1%).

Investor sentiment as measured by market breadth (advance/decline ratio) weakened to 1.4x from 1.9x as 40 stocks advanced against 29 that declined. The top performing stocks for the week were CHAMPION (+59.5%), FIDSON (+30.1%) and MAYBAKER (+27.4%) while SOVRENINS (-21.2%), ACADEMY (-17.5%) and NIGERINS (-14.8%) were the laggards. In the coming week, we expect to see slight profit-taking at the start of the week. However, we envisage market performance will be dictated by the performance of the earnings results.

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