The Nigerian stock market’s equity investors experienced their greatest weekly gain of almost N6.3 trillion as a result of a prolonged surge. This local exchange peaked just before the fiscal year 2023 profits celebration. Regardless of economic difficulties, bargain shopping has been robust.
According to Cowry Asset Limited stock market analysts, the present movement pattern of the All-share index suggests that the market is constantly in the overbought zone, as measured by the relative strength index (RSI).
The Investment stated that stock valuations and prices have greatly outperformed underlying values. Cowry Asset Limited informed investors in its market report that this implies a likely, immediate retreat, implying that the market requires a short-term correction.
The continued buying activity drove key performance indicators to all-time highs with an anticipation that there will be a drop once NGX enters the overbought territory.
Despite negative macroeconomic statistics, the local exchange has repeatedly broken new record as investor mood improves. The market is presently operating in sharp contradiction to economic dictates, with listed company equities being re-rated.
According to Exchange data, the market index, or all-share index, rose 13.84% week on week, finishing at 94,538.12 points. Stockbrokers forecast that the local bourse will break the next barrier level when corporations disclose their Q4 earnings results.
This remarkable surge was underpinned by continued funds inflow, reflecting portfolio repositioning in response to recent macroeconomic data indicating nearly a three-decade high in consumer price inflation, Cowry Asset Limited told investors in a note.
Stockbrokers explained that despite below-average traded volumes, several tickers reached new 52-week highs. As a result, the year-to-date return strengthened to 26.43%, up from 11.06% the previous week.
The sectoral performance came strong as indices closed in the green except for the banking index which retreated by 0.12% week-on-week. The decline was attributed to negative price movement registered by FBNH, GTCO, and STANBIC.
In contrast, the Industrial index outperformed, gaining 46.88% week-on-week, driven by price increases and buy interest in DANGCEM, BUACEM, and LAFARGE. The Insurance, Oil & Gas, and Consumer Goods Indexes closed the week on a bullish note, rising by 14.94%, 8.82%, and 8.18%, respectively, according to stockbrokers market update.
Market analysts explained that the surge in these indices was propelled by positive price movements in NEM, HONYFLOUR, MAYBAKER, ETERNA, and SEPLAT. Despite the market’s positive performance, participation levels weakened compared to the previous week, Cowry Asset Limited stated in its market update.
Details obtained from the Nigerian Exchange showed that total traded volume declined by 9.44% to 5.18 billion units, while the number of trades dipped by 1.31% to 79,012 deals. Value traded on the exchange was down by 12.42% to N77.80 billion.
Top-performing stocks at the week’s close included The Initiates (60%), DANGCEM (54%), HONYFLOUR (51%), MAYBAKER (51%), and BUACEM (46%). ROYALEX, MORISON, IKEJAHOTEL, FBNH, and GTCO faced declines in their share prices, shedding 22%, 17%, 11%, 5%, and 5%, respectively.
“The All-share index current movement pattern indicates that the market is persistently in the overbought region according to the RSI, with stock valuations and prices significantly exceeding intrinsic values. This signals a potential, imminent pullback, suggesting the market requires a correction in the short term”, Cowry Asset Limited told investors in its market update. Overall, equities market capitalisation advanced by N6.29 trillion in 5 days to N51.74 trillion.
