Nigeria’s Equity Market Opens with Gains, Renewed Investor Interest

Nigeria’s equity market began the week with promising gains, reporting a 0.14 per cent increase on Monday, driven by bargain hunting on various stocks, notably the recently listed Aradel Holdings.

This new shift highlights growing investor interest in the equity market as they respond to fluctuations in stock prices.

Bargain Hunting Boosts Market

Aradel Holdings led the charge as investors snapped up stocks that had previously hit record lows. Aradel’s share price increased from N485.30 to N533.80, marking a 9.99 percent gain. Custodian Investment and Eunisell Interlinked also saw gains, with Custodian moving from N11.60 to N12.60 and Eunisell rising from N8.20 to N9.02.

“This week, we expect a mixed performance in the equities market, driven by selective positioning in fundamentally strong stocks,” said investment analysts at Lagos-based Futureview. “We also anticipate the ongoing bank rights issues to serve as a positive catalyst for the market.”

Futureview’s analysts foresee that the equity market will continue to experience mixed reactions, where investor focus remains on stocks with strong fundamentals and those showing recent price adjustments.

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Market Index and Capitalisation Rise

As the market closed on Monday, the Nigerian Exchange Limited (NGX) All-Share Index (ASI) rose from 97,236.19 points to 97,374.25 points, while the market capitalisation increased from N58.920 trillion to N59.003 trillion. Investors exchanged over 297 million shares valued at N7.517 billion in 9,902 deals, with Sterling Bank, UBA, Access Holdings, Flour Mills, and FBN Holdings among the top-traded stocks.

John Holt Plc also saw significant gains, rising from N4.81 to N5.29, an increase of 9.98 percent. However, not all stocks fared well—United Capital dropped from N17.90 to N16.15, experiencing a loss of 9.78 percent, leading the list of major decliners.

Analysts Expect Further Gains in the Equity Market

Ahead of the week’s trading, analysts at Meristem research expressed optimism for continued positive movement in the equity market. “We anticipate the market to close on a positive note due to increased bargain hunting activity,” stated the Meristem team. They expect investors to target stocks with recent price declines, as these are now at more attractive levels.

Meristem analysts further highlighted the likelihood of increased investor activity in Banking, Oil & Gas, and select Industrial Goods stocks, especially those that saw price drops last week. The firm also acknowledged the possibility of profit-taking by investors as they balance inflation expectations and the potential for interest rate hikes.

“We do not rule out profit-taking on stocks that have recently appreciated,” Meristem added. “Investors are likely to weigh other attractive investment options in light of inflation and possible rate hikes. However, we project that the equity market will end the week positively.”

Expectations Amidst Broader Economic Concerns

Despite recent gains, the equity market remains under the influence of broader economic factors such as inflation and government monetary policies. As a result, investors are expected to proceed cautiously, analyzing both the risks and opportunities within the equities market. The Nigerian economy’s inflation trajectory and the Central Bank’s approach to interest rates will likely affect investor sentiment in the near term.

However, with a cautiously optimistic outlook from analysts, the equity market could continue to attract investors looking to capitalize on undervalued stocks.