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Analyst shares expectations as Nigerian stock market value rises by N67bn

Nigerian Stock Market Surges by N67 Billion in Positive Trading Session

In a buoyant display of investor confidence, the Nigerian stock market experienced a significant uptick, closing higher with a notable gain of N67 billion in market capitalization. This positive performance came amid a day of active trading on the floor of the Nigerian Exchange Limited (NGX), reflecting renewed optimism among market participants. The surge underscores a potential rebound in the equities market, which has been navigating through a mix of domestic economic challenges and global uncertainties. As traders and analysts dissect the day's activities, the overall sentiment points towards a cautiously optimistic outlook for the near term, driven by selective buying in key sectors.

The benchmark All-Share Index (ASI), a primary gauge of market performance, advanced by 109.24 basis points, representing a 0.11% increase. This propelled the ASI to close at 96,510.60 points, up from the previous session's 96,401.36 points. This modest yet meaningful rise highlights the resilience of the market, even as it contends with inflationary pressures and currency fluctuations that have characterized Nigeria's economic landscape in recent months. Parallel to the ASI's growth, the total market capitalization, which measures the aggregate value of all listed equities, climbed to N58.72 trillion from N58.65 trillion, accounting for the N67 billion gain. Such increments are not merely statistical; they translate into enhanced wealth for investors and signal potential inflows of capital into the market.

Delving deeper into the trading dynamics, the session saw a total of 8,406 deals executed, involving the exchange of 287.42 million shares valued at N5.92 billion. This level of activity indicates sustained interest from both retail and institutional investors, who appear to be positioning themselves for anticipated economic recoveries. Compared to the prior trading day, where 8,112 deals were recorded with 277.75 million shares traded at N5.65 billion, there was a slight uptick in volume and value, suggesting growing momentum. Market breadth, an indicator of the balance between advancing and declining stocks, closed positively with 29 gainers outweighing 21 losers. This ratio further reinforces the day's bullish undertone, as more stocks appreciated in value than those that depreciated.

Among the standout performers, stocks like Caverton Offshore Support Group led the gainers' chart with a remarkable 9.88% increase, closing at N2.67 per share from N2.43. This surge could be attributed to positive developments within the oil and gas services sector, where Caverton operates, possibly linked to rising global crude prices or favorable corporate announcements. Following closely was United Capital, which appreciated by 9.82% to N16.20 from N14.75, reflecting strong investor appetite for financial services stocks amid expectations of improved earnings. Other notable gainers included Meyer, up 9.79% to N8.30, and Veritas Kapital Assurance, which rose 9.76% to N1.80. These gains were spread across various sectors, including banking, insurance, and consumer goods, indicating a broad-based rally rather than a sector-specific boom.

On the flip side, the losers' table was topped by Eterna, which shed 9.96% to close at N23.50 from N26.10, possibly due to profit-taking or concerns over operational challenges in the energy sector. Oando followed with a 9.92% decline to N68.10 from N75.60, amid ongoing volatility in oil-related stocks influenced by fluctuating international energy markets. Other decliners included Sunu Assurances Nigeria, down 9.82% to N3.95, and Guinea Insurance, which fell 9.52% to N0.57. Despite these losses, the overall market managed to maintain its upward trajectory, suggesting that the buying pressure was sufficient to offset the selling activities.

Sectoral performance painted a mixed but generally positive picture. The Banking sector emerged as a key driver, posting a 1.45% gain, buoyed by strong showings from institutions like United Bank for Africa (UBA) and Zenith Bank. This could be linked to recent monetary policy adjustments by the Central Bank of Nigeria (CBN), which have aimed at stabilizing the naira and curbing inflation through higher interest rates. The Insurance sector also advanced by 0.98%, with companies like Veritas Kapital and Sunu Assurances contributing variably to the index. In contrast, the Oil & Gas sector dipped by 0.67%, reflecting the drag from stocks like Eterna and Oando, while the Industrial Goods and Consumer Goods sectors showed minimal changes, closing flat or with slight gains.

Trading volumes were dominated by financial stocks, with United Bank for Africa (UBA) leading as the most traded by volume, with 32.45 million shares exchanged in 456 deals, valued at N1.02 billion. This high activity in UBA underscores its pivotal role in the market and investor confidence in its fundamentals. Access Holdings followed with 28.76 million shares traded in 412 deals worth N678.45 million, further emphasizing the banking sector's dominance. Other actively traded stocks included Veritas Kapital (25.34 million shares), Universal Insurance (18.92 million shares), and Fidelity Bank (15.67 million shares). In terms of value, UBA again topped the chart, followed by MTN Nigeria, which saw N1.15 billion in trades despite not being the volume leader, highlighting the premium placed on telecommunications giants.

Analysts attribute this positive trading day to a confluence of factors. Domestically, the recent easing of fuel subsidy removal impacts and efforts to boost foreign exchange liquidity have bolstered investor sentiment. The CBN's interventions in the forex market, including sales of dollars to bureau de change operators, have helped stabilize the naira, reducing the exchange rate volatility that has plagued importers and manufacturers. Globally, a softer stance from major central banks like the US Federal Reserve on interest rates has encouraged capital flows into emerging markets like Nigeria. Moreover, corporate earnings season is approaching, with many listed companies expected to report improved results due to adaptive strategies in a high-inflation environment.

However, challenges persist. Inflation remains stubbornly high at over 30%, eroding purchasing power and potentially dampening consumer-driven sectors. The ongoing reforms under President Bola Tinubu's administration, while aimed at long-term growth, have introduced short-term pains, including higher borrowing costs. Market watchers are also keeping an eye on geopolitical tensions, such as those in the Middle East, which could spike oil prices and benefit Nigeria as an oil exporter but also introduce uncertainties.

Looking ahead, the market's trajectory will likely depend on upcoming economic data releases, including GDP figures and inflation reports. If the positive momentum sustains, we could see the ASI testing higher resistance levels, potentially breaching the 97,000-point mark. Investors are advised to focus on fundamentally strong stocks with robust dividend histories, such as those in banking and telecoms, while diversifying to mitigate risks from volatile sectors like oil and gas.

In summary, this N67 billion rise marks a welcome relief for the Nigerian stock market, signaling a shift towards recovery. As the NGX continues to evolve, stakeholders remain hopeful that sustained policy support and improved macroeconomic indicators will foster a more robust trading environment. For now, the day's gains serve as a reminder of the market's potential resilience amid adversity, offering a glimmer of optimism for Nigeria's broader economic narrative. (Word count: 1,048)

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