NGX Rebounds On Increased Buying Sentiments, Impressive Earnings, Sector Rotation

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The Nigerian equity market started Monday last week on a downturn, shedding 0.17%, resulting in a loss of over N94bn in investors’ worth, mirroring global trends, after major indices like the S&P 500, Nikkei, Nasdaq, DAX, and STOXX experiencing significant sell-offs as investor reacted to the Federal Reserve’s decision to maintain interest rates.

Despite a two-day decline, the Nigerian market rebounded recording three consecutive positive closes, ending the week on a high note.

The week began with a composite All-Share index of 97,745.73 basis points, a market capitalization of N55.5tr, and a year-to-date gain of 30.72%. By the weekend, however, the ASI rose to 98,592.12bps, market capitalization increased to N55.98tr, while year-to-date gain improved to 31.85%. Overall, the market rose for the week by 0.87%, adding N482.9bn to investor portfolios within the period.

Oando Plc, valued at N504.7bn by market capitalization, led the gainers with a remarkable 60.47% increase, continuing a bullish trend for the fifth consecutive session on the back of the recent acquisition of 100% stake in Nigeria Agip Oil Company (NOAC).

Other top gainers during the week were RT Briscoe (51.19%), Japaul Gold (35.80%), Academy Press (34.58%), and United Capital (31.28%).

Conversely, Champion Breweries, BUA Cement, University Press, Union Dicon Salt, and Deap Capital recorded declines of 15.03%, 9.99%, 9.92%, 9.88%, and 9.62% respectively. Throughout the week, notable insider tradings occurred, indicating strong confidence by directors in their company. Insider trading is unethical, when it is undisclosed. Both Sterling Holdings and United Capital saw significant insider trading, with Sterling Holdings insiders trading shares worth over N157m, while those of United Capital insiders amounted to over N13m.

Additionally, MTN Nigeria completed the acquisition of a 7.17% minority stake in MOMO Payment Service Bank from Acxani Capital, making MOMO a fully owned subsidiary.

The Nigerian equity market is currently trading below the 99,000 psychological level, which also serves as a strong resistance point.

However, the index is expected to rise above this level, driven by strong performances from stocks such as Oando, UCap, MTN Nigeria, and J.Berger. Julius Berger, which recently secured a significant government contract, with the Federal Government allocating N20bn monthly for the dualization of the 82km Abuja-Kano road.

Additionally, the merger between Unity Bank and Providus Bank is anticipated to create a bullish sentiment, just as the news of MOMO becoming a full subsidiary of MTN could push the market above the 99,000 line by the end of next week. The weekly chart shows the market is neither overbought nor oversold, with indicators like the Relative Strength Index at 57.34 and a bullish MACD that suggests positive movement.

With favorable news about high-cap stocks, investors are advised to stay engaged for potential gains.

NGXASI Weekly Chart (opening chart)

NGX Banking Index Weekly Chart