NSE LIVE! Equities rise by 0.5% as MPC reduces CRR to 25%

In from Success Allantee …

Quoted equities expectedly responded positively to the easing in monetary policy stance as average return at the Nigerian Stock Exchange (NSE) improved by 0.5 per cent. The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) yesterday reduced the Cash Reserve Requirement (CRR) for banks to 25 per cent, a deliberate move aimed at easing the liquidity pressure worsened by implementation of the Treasury Single Account (TSA).

Most pundits had expected the apex bank to loosen the CRR to ease the pressure on banks while sustaining the Monetary Policy Rate and the exchange rate. Investors had shown greater consideration for banking stocks in recent trading sessions in anticipation of the MPC decisions.

The All Share Index (ASI)- the value-based index that tracks prices of all quoted equities on the NSE, inched up by 0.5 per cent from 30,265.90 points to close at 30,426.10 points. Aggregate market value of all quoted equities also rose from its opening value of N10.402 trillion to close at N10.457 trillion.

The modest gain pared the negative average year-to-date return to -12.2 per cent. The market activity also improved as volume and value traded both increased 49.9% and 112.2% to 195.5 million shares and N3.1 billion respectively.

With 19 gainers and losers each, the positive market performance was driven mainly by gains recorded by some highly capitalised stocks including Dangote Cement, which rose by 1.2 per cent, Seplat Petroleum, which added 4.9 per cent and Forte Oil, which rose by 1.0 per cent. Most indices ended in the green, showing relatively widespread positive sentiments. The NSE Industrial Goods index rose by 0.3%.

The NSE Consumer Goods index gained 1.1% . The NSE Oil & Gas Index also rose by 1.2% while the NSE Insurance index increased by 1.4%. However, with profit-taking on major banking stocks such as Guaranty Trust Bank and Stanbic IBTC Holdings, the NSE Banking Index declined marginally by 0.3 per cent.

Market analysts said they expected the market to trade today (Wednesday) in the positive, especially in the banking subsector. The banking subsector is the dominant group on the NSE and its performance could colour the overall market position.

“We anticipate a rebound in the performance of banking stocks in the next trading session, given the outcome of the MPC today which was concluded with a decision to reduce Cash Reserve Requirement (CRR) to 25.0% from 31.0%. We believe this will ease the TSA induced perceived liquidity crunch in the system. Thus enabling Banks the avenue to create more risk assets,” Afrinvest Securities stated.

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