The Nigerian Exchange Ltd (NGX) has posted a growth of N810 billion ahead of the first 2022 Monetary Policy Committee, MPC, slated for Jan. 24 and 25.
The market capitalisation, which opened last week at N23.951 trillion garnered N810 billion or 3.38 per cent to close at N24.761 trillion, Jan. 21.
Also, the NGX All-Share Index inched higher by 1,502.68 or 3.38 per cent to close at 45,957.35 from 44,454.67 posted in the preceding week due to gains by some blue chips.
Some analysts who spoke with the News Agency of Nigeria on Sunday in Lagos attributed the rally to share buyback by Dangote Cement and anticipation of improved earnings for the 2021 financial year.
The Managing Director, Morgan Capital Securities Ltd., Mr Rotimi Olubi, said the commencement of the second tranche of shares buyback programme by Dangote Cement during the period contributed to the growth.
“The programme saw the share price of the company advancing from N252 per share to N284 at the close of market on Jan. 21.
“This also drove the NGX ASI index and the market capitalisation by over N500 billion,” Olubi said.
He added that the expectation of earnings report from quoted companies for the year ended 2021 and positive sentiments from investors resulting from bargain hunting in the prices of discounted equity shares led to the growth posted.
On the expectation of the global and domestic stock market this week, Olubi said the news of soaring inflation and the prospect of further interest rate hikes which dampened the global equities, commodities and crypto market outlook would determine the direction of the market this week.
He said the outcome of the MPC meeting in which the committee would decide on interest rate, cash reserve and liquidity ratio was also a key factor to watch out for going into the new week.
The Chief Operating Officer, InvestData Ltd., Ambrose Omordion, said the nation’s equity market started 2022 on a strong momentum due to year end portfolio rebalancing and repositioning for the new year.
Mr Omordion said the buying interest coincided with the historical positive trends in January.
He added that the growth was fuelled by rally in oil price and improved financial earnings announced by some quoted companies during the week under review.
Mr Omordion noted that price appreciation in high cap and blue chip stocks impacted the market positively as revealed by NGX index that recorded 3.4 per cent on high traded volume and strong buying pressure, ahead of next week MPC meeting.
According to him, other factors that shaped the market so far are mixed macroeconomic indices, listing of BUA Foods and Dangote Cement share buyback programme.
On the outlook for next week, he said: “We expect a mixed performance and volatility as more companies release their earnings, MPC meeting and profit taking as benchmark index hits 14 years high.”
Analysts at Cordros Research said the outcome of the MPC would determine the direction and performance of the stock market this week.
“In the week ahead, we believe investors will be focused on the outcome of the MPC meeting to gain further clarity on the movement of yields in the fixed income market.
“Consequently, we expect a ‘choppy theme’ (where prices swing up and down) as cautious trading will likely dominate the market.
“Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the weak macro story remains a significant headwind for corporate earnings,” they said.
Meanwhile, a total turnover of 1.86 billion shares worth N47.49 billion was traded by investors in 20,861 deals.
This was in contrast with 1.60 billion shares valued at N32.72 billion that exchanged in 22,607 deals in the week before.
The financial service industry (measured by volume) led the activity chart with 815.36 million shares valued at N7.07 billion traded in 10,736 deals.
The sector contributed 43.89 per cent and 14.88 per cent to the total equity turnover volume and value respectively.
The ICT industry followed with 596.58 million shares worth N845.02 million in 1,028 deals.
The third place was the conglomerates industry, with a turnover of 161.347 million shares worth N191.189 million in 983 deals.