The bullish momentum in the Nigerian Exchange Limited, NGX, moved up to a new height for the third consecutive week this year, with investors gaining an unprecedented N6.293 trillion at the close of trading over the weekend, the highest in the history of the Nigerian stock market.
This comes as Nigeria’s currency, Naira, sank deeper in the parallel market during the weekend, trading at N1,270/ USD1, the weakest in history.
Meanwhile, the NGX, All-Share Index, ASI, a major stock market indicator surpassed the 90,000 points mark, driven by robust investors’ interest in diverse stocks across the Industrial, Insurance, Oil & Gas, and Consumer Goods sectors to close on Friday at 94,538.12 points from 83,042.96 points the previous week.
Analysts have explained that the mixed trading pattern on the Exchange reflected profit booking and portfolio repositioning by market players as they hedged against Nigeria’s galloping inflation while timing the dividend season, a situation that is not helped by the mixed outlook on the fixed income market where rates continue to fluctuate in the face of unclear direction from the Central Bank of Nigeria (CBN), whose Monetary Policy Committee (MPC) meeting has been postponed several times. The meeting is now rescheduled for next month.
Analysis of the market last week showed that the NGX market capitalisation, which represents the total value of stocks in the Exchange surged to N51.735 trillion from N45.442 trillion the previous week. Consequently, the Year-to-Date, YtD, return surged to 26.4%.
Analysts at Cordros Research stated: “In the short term, we expect market performance to be dominated by the bulls, as positioning for 2023 full-year earnings releases and accompanying dividends declarations should outweigh profit-taking activities.
‘‘Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the weak macro environment remains a significant headwind.”
Commenting as well, analysts at InvestData Consulting said: “We expect mixed sentiment on positioning and profit-taking, as portfolio realignments persist ahead of more unaudited fourth quarter, Q4 2023 numbers in the face of volatility and expected MPC meeting. ‘‘Any pullback at this point will add more strength to upside potential. As such, investors should take advantage of price correction’’.
The renewed depreciation of the Naira which began early this week hitting a new low of N1,370 in the parallel market after Thursday’s low of N1,300 per dollar, had sent shock waves across the various markets with dealers suggesting that the pressure would continue this week.
The local currency depreciated to N902.45 per dollar in the Nigerian Foreign Exchange Market (NAFEM).
Data from FMDQ showed that the indicative exchange rate for NAFEM rose to N902.45 per dollar from N902.08 per dollar on Thursday, indicating 37 kobo depreciation for the naira.
The volume of dollars (turnover) traded on the window fell by 17 percent to $145.89 million from $176.53 million on Thursday.
Consequently, the gap between the official and parallel market exchange rates widened to N467.55 per dollar yesterday from N397.92 per dollar on Thursday.
