CBN’s rate cut buoys stock market to maintain positive momentum 

By Peter Egwuatu  

The Nigerian stock market ended last week on a positive note, following the Central Bank of Nigeria, CBN’s Monetary Policy Committee, MPC’s   cut in the Monetary Policy Rate, MPR by 50 basis points, bps.

Consequently, the late-session gains on the final two trading days more than offset the weak outturns in the earlier part of last week.

Analysts noted that  

Investor sentiment was buoyed by the MPC’s first rate cut in five years, which drove renewed interest in equities.

It will be recalled that the MPC last  Tuesday, reduced the MPR by 50bps to 27.0%   from 27.50%, marking the first shift towards monetary policy easing in 5 years. The Committee’s decision to cut rates was primarily driven by the sustained disinflationary trend,  continued stability of the naira, and robust external reserves.  

Analysis of trading on the Nigerian Exchange Limited, NGX showed that the gain in Zenith Bank by 9.1%, followed by Dangote Cement, which went up 1.7%, Stanbic IBTC gained 9.3%, WAPCO up by 4.0%   and International Breweries garnered 10.1% to drive the NGX All-Share Index, ASI higher by 0.2% Week on Week, W/W to close at 142,132.02 points from 141.845.35 points the previous week.   The  Month-to-Date, MtD and Year-to-Date, YtD returns improved to 1.3% and 38.1%, respectively.

The NGX market capitalisation gained over N216 billion, W/W, to close at N89.960 trillion from N89.744 trillion the previous week.

Trading activity also strengthened, as both volume and value advanced by 73.8% W/W and 257.7% W/W, respectively. Meanwhile, sectoral performance was mixed, as the Industrial Goods Index went up by 1.3%, followed by Consumer Goods Index 1.2%, and Banking Index   1.2% , while the Insurance Index nosedived by

-0.9% and Oil & Gas Index by -1.6%.

Meanwhile, in their projections for the week ahead, analysts at Cordros stated: “Looking ahead, we expect sentiment to improve further, supported by the more accommodative interest rate environment and the prospect of increased liquidity flows into equities”.

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