Equities market recorded new heights in January, appreciated by 35.3%

THROUGH the first month of year 2024, equities trading at the Nigerian Exchange Limited (NGX) enjoyed positive sentiments through the month save for January 10 and 30 when profit taking activities dipped the market.

The NGX recorded impressive gains in January 2024 as the All-Shares Index (ASI) surged by 35.3 percent, reaching 101,154.46 as at the last day of trading in the month.

According to data from the local bourse, in the month under review, the NGX’s ASI increased to 101,154.46 from 74,773.77, which started on January 2.

During the month, the NGX made records, reaching new heights amidst gains in large- and mid-capitalised stocks. On January 18, it ranked the best stock market globally, displacing that of Argentina as NGX’s All-Share Index appreciated by 2.38 percent, reaching a historic 90,063.25 points.

Another historic feat was made on January 24 with the local bourse crossing the 100,000 basis points as the ASI crossed to 101,571.11bps, appreciating by three percent.

Cumulatively, equities investors gained N14.440 trillion as the local bourse’ market capitalisation closed January at N55.357 trillion from N40.917 trillion with which it started.

This massive gain in market capitalisation is coming on the backdrop of rising insecurity, inflation, other macroeconomic challenges and global uncertainty.

Since the beginning of the year, the stock market has witnessed an unprecedented rally and buying interest, especially in the financial services, consumer and industrial goods sub-sector, which has continued to trigger massive bargain hunting in large company shares.

Sectoral performance as shown in data from the NGX revealed that NGX Banking index dropped by 3.4 percent to 866.93 basis points from 897.20 basis points it opened this year, while NGX Consumer Goods index closed at 1,394.05 basis points, representing an increase of 24 percent from 1,121.29 basis points it opened for trading in 2024.

NGX Oil/Gas index gained 19.9 percent to close on January 31 at 1,251.22 basis points from 1,043.06 basis points.

However, NGX Industrial index emerged the best-performing index, gaining 107.86 percent to close at 5,637.83 basis points as at January 31 from 2,712.27 basis points the stock market closed for trading in 2023. The growth in NGX Industry index has been influenced by soaring demand for Dangote Cement Plc stock.

In January, Dangote Cement’s stock price appreciated by N443.10 per share or 138.5 percent to close on January 31 at N763 per share from N319.90 per share it opened for trading this year.

The cement maker’s market capitalization gained N7.55 trillion in one month to close at N13 trillion as of January 31.

This positive momentum of Dangote Cement’ stock price commenced when it was announced to the capital market community that Nigeria’s billionaire investor, Mr Femi Otedola, had acquired some stake in the cement company.

Looking ahead, analysts anticipate the continuation of positive sentiments in the local stock market. However, a mixed trend is predicted with a possibility of profit-taking as investors are likely to continue sectoral rotation, capitalising on stocks that experience pullbacks to position themselves strategically.

“This rotation strategy is expected to create further buying opportunities, especially in anticipation of more earning releases in the corporate reporting season. Amidst all these, we continue to advise investors to take position in stocks with consistent track records of dividend payments and strong fundamentals and growth prospect to support earnings growth,” analysts said in Cowry Financial Markets report.

“The premium status of Nigerian equities market will persist. PFAs will contribute to the growth of equities market. We see a bullish run in the fixed income space as yields adjust lower in advanced economies. Foreign investors will find Nigerian markets attractive as central banks cut rates in 2024, leading to a shift in global capital flow. Corporate issuers may raise debts at the short end of the curve, capitalising on FG’s indication to reduce reliance on domestic debt market,” United Capital said in its Nigeria Economic and Financial Markets Outlook 2024 report.