Stock market up 0.14% as focus shifts to MPC meeting

Ahead of the outcome of the ongoing Monetary Policy Committee (MPC) meeting, Nigeria’s equities market opened the new week in green, rising by 0.14 percent on Monday. Stocks like Flour Mills (+9.81 percent), Fidelity Bank (+9.93 percent), and FCMB Group (+10 percent) helped push the market higher.

“We expect investors to remain cautiously optimistic, ahead of this week’s MPC meeting, where the CBN will announce its interest rate decision,” analysts at Lagos-based Vetiva Research said in their September 23 note ahead of Monday’s trading.

In 10,669 deals, investors exchanged 810,429,957 shares worth N8.293billion. Mecure, Transcorp, Fidelity Bank, Access Holdings and NPF Microfinance Bank shares were most traded stocks on Monday.

The Nigerian Exchange Limited (NGX) All-Share Index (ASI) and equities market capitalisation increased from preceding trading day’s 98,247.99 points and N56.456 trillion respectively to 98,386.6 points and N56.536 trillion. The market’s year-to-date (YtD) return stood higher at +31.58 percent.

“Looking forward, the equities market is expected to retain its buy interest as investors cherry-pick undervalued stocks. However, given the sentiment that rates might have peaked in the fixed income and money markets and investors locking in on current rates, we expect some bearish undertone to persist in the equities market,” United Capital research analysts said in their September 23 note to investors.

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Last week, the market rose by about N454billion as investors bought banking, insurance, and oil & gas stocks despite profit taking in consumer goods and industrial stocks.

“Nevertheless, the bulls will remain incentivised to persist in bargain hunting, given the tremendous mid-long-term opportunities in the equities market. Fund managers and businesses may begin to entertain mid-long-term (≥6 months) investment objectives, cherry-picking only sound equities with strong fundamentals and ongoing corporate actions. This strategy will maximise market opportunities, thereby optimising portfolio returns,” United Capital research analysts further said.

“We expect positive sentiments in the equities market this week, as investors continue to allocate funds to stocks that are currently at attractive levels. Also, we anticipate continued interest on specific stocks like Fidson and UBA, spurred by recent corporate action and the expectation of dividend declaration, respectively,” according to Lagos-based Meristem research analysts in their September 23 note.

“Given the MPC meeting scheduled to hold on the 23rd and 24th of September, we do not expect the committee’s decision, nor upcoming T-bills auction to cause outflow of funds from the equities market. Unless there are unexpected shocks that could sway the market otherwise, we expect the local bourse to close in the green zone this week,” Meristem research analysts further noted.