NSE LIVE! 3 biggest stocks rally market in MPR response

The first trading session after the formal announcement of the cut in the benchmark interest rate by the Central Bank of Nigeria (CBN), Nigerian equities showed signs of positive response as increased demand for the market’s three most capitalised stocks broke the seven-day downtrend and pushed the market away from a new low.
The Monetary Policy Committee (MPC) of the CBN yesterday, after its two-day meeting, slashed the Monetary Policy Rate (MPR), which serves as benchmark for interest rates, from 13% to 11%, with an asymmetric corridor of +2% and -7%. The apex bank also reduced Cash Reserve Requirement from 25.0% to 20.0%.
With the reduction in returns on fixed-income securities, investors appeared to shift to quoted equities. Increased demand for the market’s most capitalised stocks-Dangote Cement, Nigerian Breweries and Guaranty Trust Bank, pushed up their share prices, providing support for the overall market position.
While there were still almost two losers to every gainer, the gains by the three most capitalised stocks helped the market to a considerable gain of 0.53 per cent, equivalent to a gain of N51 billion. Aggregate market value of all quoted equities rose from N9.488 trillion to close at N9.539 trillion. The All Share Index (ASI), the benchmark index that tracks prices of all quoted equities at the Nigerian Stock Exchange (NSE), inched up from 27,596.81 points to close at 27,743.92 points.
The gain helped to moderate the negative average year-to-date return, which had crossed 20 per cent yesterday, to -19.95 per cent.
“The appreciation recorded in the prices of some highly capitalized stocks today prevented the NSE ASI from hitting a new year low. The shares of Dangote Cement and GT Bank were primarily responsible for the upturn in the value of the index,” said analysts at FSDH Securities.
Analysts at Afrinvest Securities said the market performance might not be unconnected with the decisions of the apex bank yesterday.
“We believe that today’s gain is largely connected to the MPC’s decision to reduce interest rate to 11% with an asymmetric corridor of +2% and -7%, further boosting system liquidity. Thus, forcing fund managers to reallocate funds to equities,” Afrinvest Securities stated.
The Lagos-based dealer at the NSE however advised “investors to tread cautiously as market sentiment remained broadly weak”.
Dangote Cement, Nigeria’ s most capitalised quoted company, led the 12-stock gainers’ list with a gain of N1.99 to close at N159.99. Guaranty Trust Bank, Nigeria’s most capitalised bank and third most capitalised company, rallied 99 kobo to close at N21.99. Nigerian Breweries, Nigeria’s second most capitalised stock, followed with a gain of N116.70.

Read also: NSE LIVE! Equities’ return hits 9-month low at -20.37%

The bullish sentiments also reflected on most indices at the Exchange. The NSE Banking Index recorded above-average gain of 1.1%. The NSE Industrial Goods Index rose by 0.6%. The NSE Consumer Goods Index and NSE Insurance Index inched up by six basis points each. However, the NSE Oil and Gas Index declined by 0.4 per cent.
Total turnover was above recent average with the exchange of 203.82 million shares valued at N2.75 billion in 2,417 deals.
However, the downtrend remained pervasive with 20 losers on the chart. Mobil Oil Nigeria led the losers with a loss of N6.94 to close at N132.05. Guinness Nigeria followed with a loss of N2 to close at N120. Julius Berger Nigeria dropped by N1.97 to close at N37.53. Ecobank Transnational Incorporated and International Breweries lost 50 kobo each to close at N16 each while UAC of Nigeria declined by 21 kobo to close at N27 per share.

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