Stock market closes in red as investors await MPC outcome

Nigeria’s equities market opened this week on a negative note by 0.49 percent or N289billion as investors await the outcome of ongoing meeting of the Monetary Policy Committee (MPC).

At the close of trading, the Nigerian Exchange Limited (NGX) All-Share Index (ASI) and equities market capitalisation decreased from preceding day’s highs of 104,647.37 points and N59.168 trillion respectively to 104,136.35 points and N58.879trillion. The stock market’s year-to-date (YtD) return lowered to +39.27percent.

Vetiva research analysts had said on Monday ahead of market open that given the bullish close in banks last week, “we might see profit taking action at the start of this week, while market trades tepid in anticipation of the second MPC meeting of the year”.

Investors sold mostly shares of Dangote Sugar Refinery Plc, Ikeja Hotel Plc and Jaiz Bank Plc. Dangote Sugar Refinery Plc dipped most, from N59 to N53.10, losing N5.90 or 10percent. It was followed by International Energy Insurance which dropped from N1.50 to N1.35, shedding 15kobo or 10percent.

Also, Jaiz Bank was down from N2.42 to N2.18, losing 24kobo or 9.92percent, while Ikeja Hotel was down from N6.48 to N5.85, losing 63kobo or 9.72percent.

In 9,343 deals, investors exchanged 306,821,620 shares worth N11.383billion. NIDF, Jaiz Bank, UBA, Nigerian Breweries, and Access Holdings were activities traded stocks.

“Looking ahead, we expect activities in the fixed income market to continue to stand as key demotivators for equities investments. Also, the indications of hawkish stance by the CBN in its next meeting to be held on Monday, 25 and Tuesday 26 March 2024, in line with its inflation targeting framework, will continue to also cast a bearish spell across risk asset classes.

“However, given the level of activity by the bulls in the market, pending the release of the financial statements of some corporates (particularly the top tier banks), the dividend season and strong corporate resilience, we expect further bargain hunting for the rest of the week.

“Given the recent bearish run, a lot of stocks drove further close to the oversold region, reflecting potential upsides. Ultimately, we expect strong corporate actions and dividend announcements to stand as a primary motivator toward the equities market, through to the first two weeks of April,” said United Capital research analysts in their March 25 note.

“This week, we anticipate subdued performance in the equities market. This stems from the anticipated rate hike by the MPC, which is likely to influence higher rates at the T-Bills auction scheduled for Wednesday. Consequently, investors may go in search of higher yields in the fixed income market, potentially constraining liquidity in the local bourse space.

“Additionally, we anticipate profit-taking activities on stocks that have already experienced considerable gains. Nonetheless, investors may opt to retain their equity holdings if rates do not meet anticipated levels, resulting in minimal outflows to the fixed income market,” Meristem research analysts said on Monday in their stock recommendation.