The Nigerian stock market has been characterized by a bullish trend, coinciding with the release of a Gross Domestic Product (GDP) report indicating a 2.51% growth in the second quarter of 2023 (Q2’23). This growth rate falls significantly below both the figures recorded in the first quarter and what analysts had projected.
During the past week, the Nigerian Exchange Limited (NGX) All-Share Index (ASI) saw a 1.3% increase on a Week-on-Week (WoW) basis, closing at 65,558.91 points. This upward movement was primarily driven by investor interest in BUA Foods, which saw a 7.9% increase, as well as notable gains in Dangote Sugar (35.7%) and Transcorp (39.4%).
Consequently, the Month-to-Date (MtD) and Year-to-Date (YtD) gains have risen to 0.6% and 26.3%, respectively.
In terms of trading activity, the total trading volume experienced a 7.3% increase WoW, while the trading value underwent a slight 0.4% decline WoW.
A sector-wise analysis reveals an 11.6% rise in the Consumer Goods Index and a 1.20% increase in the Insurance Index. On the other hand, the Banking Index saw a decline of -3.6%, and the Oil and Gas Index decreased by -2.4%. The Industrial Goods Index remained stable.
Analysts from Cordros Research commented on the market outlook, noting, “Looking ahead, we expect investor sentiment to be influenced by macroeconomic developments and movements in fixed-income market yields. Overall, we emphasize the importance of investing in fundamentally strong stocks, as the challenging macro environment continues to impact corporate earnings.”
Similarly, analysts at Cowry Asset Management Limited expressed their views, stating, “The current trend of positive sentiment is anticipated to persist, supported by the ongoing assimilation of robust economic data highlighting Nigeria’s commendable output performance and positive trajectory. However, the market’s response to elevated T-bill rates, along with renewed interest in bargain opportunities and portfolio adjustments, remains significant. Meanwhile, our advice to investors remains focused on stocks with solid fundamentals.”
Adding to these perspectives, analysts at InvestData Consulting projected, “We anticipate a mixed sentiment as the market reacts to high Treasury bill rates and a hyperinflationary environment marked by a 24.1% rate. This situation is juxtaposed with both bargain hunting and portfolio realignment activities. The market’s attention will also be on the upcoming earnings reports of first-tier banks and the continued sector rotation.”
In conclusion, the Nigerian stock market’s recent trajectory has been bullish, guided by economic indicators and sector-specific dynamics. The analysts concur on the importance of prudent investment choices given the prevailing economic conditions and shifting market forces.
