Market defies political intrigues as indices surge by 3.76%
Unperturbed by the political tension heralding the postponed Saturday’s Presidential and National Assembly elections, the equity market closed higher last week, in volume traded and positive sentiments for financial services stocks.
Investors’ sustained interests in the shares of companies in the banking sub-sector ahead of others, dominated transactions by the bulls.
Of note, was the jostling for shares of Diamond Bank Plc and Access Bank Plc last week, which however shifted attention to other highly capitalised stocks, causing the NSE All-share Index (ASI) and market capitalisation to appreciate by 3.76 per cent to close the week at 32,715.20 points and N12.2 trillion respectively.
A breakdown of activities last week, showed that at the end of transactions on Monday, the reign of the bulls continued unabated on the Nigerian Stock Exchange (NSE) as virtually all the bluechip stocks appreciated in price, especially Betaglas and Seplat, causing market capitalisation to increase further by N94 billion.
Specifically, at the close of transactions on Friday, ASI was up by 251.95 absolute points, representing an increase of 0.8 per cent to close at 31,781.87 points. Similarly, the market capitalisation increased by N94 billion, closing at N11.852 trillion.
The upturn was impacted by gains recorded in medium and large capitalised stocks, among which are Beta Glass, Seplat Petroleum Development Company, Unilever Nigeria, Cadbury Nigeria and Stanbic IBTC Holdings.
Also on Tuesday, ASI gained 680.44 absolute points, representing an increase of 2.14 per cent, to close at 32,462.31 points. Similarly, market capitalisation increased by N254 billion, to close at N12.106 trillion.
The Chief Research Officer of Investdata Consulting Limited, Ambrose Omodion, attributed the “last minute” persistent rally to anticipations of positive sentiment for earnings season and post-election appreciation.
“The seeming positive sentiment for earnings season and post-election rally, which had triggered huge trade volume in recent weeks was despite the countdown and heightened political risk ahead of the Presidential election. “This indicates gradual position taking by smart money in the nation financial markets due to a combination of factors such as the high dividend yield of listed companies, high interest rate in the money market and others considered good enough to offset lower yields in developed market,” he said.
For analysts at Afrinvest Limited, “in recent weeks, we have observed increased inflow into the domestic market despite the political risk. We believe concerns for post-election stability are beginning to moderate thus the increased appetite for cheap assets. Hence we expect the market to record gains in the near-term.” Meanwhile, a turnover of 2.834 billion shares worth N28.138 billion were recorded in 28,739 deals by investors on the floor of the exchange, higher than a total of 1.894 billion shares valued at N26.884 billion that was exchanged in 19,213 deals during the preceding week.