By Kayode Tokede
Coming from a yearly gain of 50.03 per cent in 2020, the Nigerian equities market ended the first month of the year 2021 on a strong positive note as investors’ investment went up by N1.130 trillion.
Reviewing stock market activities in January, the basic indicators of the Nigerian Stock Exchange (NSE), All-Share Index gained 5.32 per cent to close on January 29, 2021 at 42,412.66 basis points, from 40,270.72 points at which it opened for the year. Market capitalisation for the period rose by N1.130 trillion to close at N22.187 trillion as at January 29, 2021 from N21.057 trillion.
All the sectorial performance were positive, the NSE’s Insurance index recorded the highest rise during the month, gaining 29.77 per cent. The NSE Oil and Gas index followed with a monthly gain of 12.43 per cent, while NSE Banking index rose by 7.89 per cent in the month of January.
Others are NSE Pension, Consumer Goods, NSE 30, Premium Board, Lotus II and Industrial Goods indices recorded a monthly gain of 7.49 per cent, 7.04 per cent, 4.93 per cent, 4.12 per cent, 3.55 per cent and 1.41 per cent, respectively.
The best-performing stocks for the month under review were predominantly low and medium caps across the consumer goods, insurance, agribusiness and oil marketing sectors, led by Champion Breweries, which gained 261.63 per cent. It was followed by Livestock Feeds’ 85.61 per cent and the 73.08 per cent gain notch by Linkage Assurance. Mutual Benefits Assurance climbed 59.26 per cent up, on positive sentiment for sector recapitalization moves; just as NCR chalked 59.18 per cent, among others.
During the month, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) at the end of the 277th edition of their meeting, been the first for the year, unanimously voted to retain the MPR and other key parameters at their current rates; hold Monetary Policy Rate (MPR) at 11.5 per cent, maintained the asymmetric corridor around the MPR at +100/-700bps, retained Cash Reserves Ratio (CRR) at 27.5 per cent and Retained liquidity ratio at 30.0 per cent.
Capital market analysts stated that January was another great month as the Nigerian stock market started the year 2021 on a bullish note, extending the sharp market recovery and bull ascendance, driven by positive sentiment, inflow of funds from the fixed income market, oscillating oil price, corporate earnings expectations and other factors that had supported the equity market in 2020.
Speaking on market performance for January, the head of research, PanAfrican Capital Holdings Limited, Moses Ojo said the low yield environment in the money market instrument drive equities market performance in January, stressing that the trend might not continue towards the end of first quarter.
According to him, the low yield environment impacted on the equities market in January. The low yield that was introduced by CBN since 2019 is still impacting on the equities market.
The managing director/CEO of APT Securities and Funds Limited, Mallam Garba Kurfi, also said, “As long as low yield in the money market persist, we will continue to have liquidity in the capital market.
APT Securities and Funds expected the equities market to have a gradual rise in prices over the course of the year, saying that “The outstanding performance recorded by the market in the previous year would not likely repeat itself.
“However, with the market already up 5.32 per cent at the end of the first trading month of the year, we expect the market to end the year on a positive note despite the rising insecurity and the second wave of the pandemic. Hence, we would continue to advice investors to take position in fundamentally sound stocks with good growth prospects.”
The chief operating officer of InvestData Consulting Limited, Mr Ambrose Omordion said that equities trading on the Nigerian Stock Exchange (NSE) in January, the first month of the year, ended on a positive note.
According to him, the positive responses to some of the results released and expectation of companies’ performance have pushed many equities to new 52-week highs, confirming the high liquidity and confidence in the market.
On market outlook, Omordion said that “Volatility is expected to continue in the new month, even as the outlook remains mixed due to likely price corrections, or pullbacks for a few days due to profit taking and portfolio reshuffling ahead of year-end and 2021 corporate actions.
“The anticipated correction in the new month will strengthen recovery. Despite the rising inflation, insecurity and the second wave of coronavirus, as this wave will further boost the healthcare sector due to government and CBN commitment to enhance public health.”
He added that the current breakouts of resistance levels offer traders opportunities to position for the short term, while investors should target fundamentally sound, and dividend-paying stocks for possible dividend income and capital growth.