With the first trading week of 2024 closing positive, Nigerian equities are expected to extend their performance in the second week as investors take positions, OLUSHOLA BELLO writes.
According to analysts, the Nigerian stock market should keep performing well as long as investors look for good deals.
The Nigerian Stock Exchange (NGX) had a strong start to the year, with positive feelings and a strong winning run. This was the first trading week of the year. Intense demand for equities with a wide range of prices further propelled the rebound, contributing to positive market breadth.
This upward trajectory, which seems to be the result of the January effect, indicates that there is a significant demand for Nigerian equities and prepares the market for the next reporting and dividend-generating season.
As a result, the first week of trading saw not only record highs in the market but also records breaking beyond benchmarks, resulting in a decidedly optimistic trend as the fiscal year began on a very positive note.
“We anticipate an extended positive performance on the bourse this week, buoyed by strong investor sentiment,” analysts at Afrinvest Limited stated.
According to analysts at Cordros Securities Limited, “even as institutional investors continue to search for clues on the direction of yields in the FI market, we believe positioning for 2023 full-year earnings releases and accompanying dividend declarations will continue to support buying activities on the local bourse in the near term.” However, given that the dismal macro environment continues to be a major drag on corporate earnings, we urge investors to look for trade opportunities only in fundamentally justified firms.
Cowry Assets Management Limited expects the market to experience mixed sentiment in the upcoming trading week, potentially influenced by profit-taking activity in the local market.
“As the NGX-ASI approaches the psychological threshold of 80,000 plus, market participants are expected to position themselves strategically and take considerable advantage of the price corrections.
“The looming monetary policy committee meeting in January and the impending earnings and reporting season are anticipated to be pivotal factors shaping market dynamics in the near term. Amidst all these, we maintain our advice to investors on taking positions in stocks with sound fundamentals and whose earnings yield and earnings per share support a higher payout ratio, while taking advantage of the price corrections in the market.” Cowry said.
Last Week’s Trading Activities
The first trading week of 2024 began on a strong note for the local stock market, which saw increases during every trading session this week.
In honor of the New Year’s celebration, the federal government proclaimed Monday, January 1, 2024, a public holiday. This resulted in the market being open for business for four trading days.
As a result, the All-Share Index closed at 79,664.66 points, down 6.54% week over week (WoW). Similarly, market capitalization increased by N2.680 trillion, reaching N43.594 trillion at the end of the week.
The bullish trend was evident in several areas, with notable advances made in the financial services industry in particular. Gainers were the NGX Banking and NGX Insurance indices, which increased by 10.29% and 14.08%, respectively. Additionally, there were appreciations of 4.40 percent, 3.58 percent, and 3.00 percent for the NGX Consumer Goods, NGX Industrial Goods, and NGX Oil & Gas indices.
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