Emmanuel Ochayi
Equity Market Sees Early Gains as Investors Await MPC Decision
Nigeria’s equity market opened the week with a 0.14% increase on Monday, driven by gains in Flour Mills, Fidelity Bank, and FCMB Group.
Analysts remain cautiously optimistic as the Monetary Policy Committee (MPC) meeting approaches, where a decision on interest rates is expected.
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Investors exchanged over 810 million shares in 10,669 deals, with a total value of N8.293 billion. Popular stocks included Mecure, Transcorp, Fidelity Bank, Access Holdings, and NPF Microfinance Bank.
Flour Mills saw a 9.81% rise, while Fidelity Bank and FCMB Group increased by 9.93% and 10%, respectively.
“The equity market is holding strong, but we expect investors to stay cautious as they await the MPC’s decision on interest rates,” said Vetiva Research analysts in their report on Monday.
The Nigerian Exchange Limited (NGX) All-Share Index (ASI) climbed to 98,386.6 points from the previous trading day’s 98,247.99 points. Market capitalisation also rose to N56.536 trillion, with the year-to-date (YtD) return now standing at 31.58%.
Analysts Anticipate Mixed Sentiments in the Market
Despite the upward trend, analysts have mixed expectations about the coming days. Some caution that the equity market might experience a bearish undertone as investors focus on fixed income and money markets, which might lead to lower trading volumes in the equity market.
“Although the equity market is expected to hold steady, some investors may lock in current rates as they anticipate the MPC’s interest rate announcement,” analysts at United Capital said. They noted that rates in the fixed income market might have peaked, which could affect the market.
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However, the firm added that the equity market is expected to retain some buy interest, particularly from investors cherry-picking undervalued stocks with strong fundamentals.
“Looking forward, we expect positive sentiment to continue in the equity market, with investors drawn to mid-long-term opportunities in solid stocks,” United Capital stated.
Equity Market Outlook Ahead of MPC Meeting
The equity market performed strongly last week, gaining N454 billion as investors bought stocks in the banking, insurance, and oil and gas sectors, even as profit-taking occurred in consumer goods and industrial sectors.
Analysts expect similar trends to persist, with specific stocks showing significant potential.
“Fund managers may start eyeing stocks with solid fundamentals for long-term gains,” said Meristem research analysts. They believe that attractive stocks like Fidson and UBA will continue to draw attention due to expected corporate actions and potential dividend declarations.
“The MPC meeting this week will likely impact market sentiment, but we don’t expect a drastic shift in the equity market unless there are unexpected shocks,” Meristem analysts noted.
Positive Sentiment Continues in the Market
The market is likely to close the week on a positive note, driven by continued investor interest in undervalued stocks and corporate actions.
“Investors will stay focused on opportunities in the market, especially as stocks like Fidson and UBA show promise,” said Meristem analysts.
As the MPC meeting unfolds, all eyes are on the Central Bank of Nigeria’s next move, but for now, the market remains a focal point for investors seeking returns.
