By Chinwendu Obienyi

With the rate hike in interest rate by the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), market operators have stated that this could intensify risk-off sentiments to trading activities on the floor of the Nigerian Exchange Limited (NGX) when it resumes on Tuesday.

The MPC opted once again to increase the Monetary Policy Rate (MPR) by 200 basis points (bps) to 24.75 per cent during its meeting on the 25th and 26th of March. This decision, according to the CBN Governor, Olayemi Cardoso was primarily due to existing inflationary pressures, the imperative to anchor inflation expectations, and the need to maintain exchange rate stability.

As a result of the hike, the domestic bourse witnessed another subdued performance despite closing marginally higher on two of the four trading sessions last week. Owing to sell pressures in bellwether stocks such as FBN Holdings, Dangote Sugar, the All Share Index (ASI) depreciated by 0.08 per cent to close the week at 104,562.06 points from an opening value of 104,647.37 points.

Furthermore, investors’ wealth fell by N48 billion to close at N59.121 trillion despite opening the trading week at N59.169 trillion. As a result, the Month-to-Date (MTD) and Year-to-Date (YTD) returns moderated slightly to +4.7 per cent and +40.0 per cent, respectively. All other indices finished higher with the exception of NGX Main Board, NGX 30, NGX Consumer Goods and NGX Growth which depreciated by 0.28 per cent, 0.16 per cent, 0.97 per cent and 0.14 per cent, respectively while the NGX Oil and Gas and NGX Sovereign Bond indices closed flat.

Similarly, activity level remained weak as trading volume and value decreased by 31.9 per cent week-on-week (w/w) and 7.8 per cent w/w, respectively, with a total turnover of 1.804 billion shares worth N52.040 billion in 38,550 deals was traded by investors on the floor of the Exchange, in contrast to a total of 1.735 billion shares valued at N48.755 billion that exchanged hands in the previous week in 45,237 deals.

Related News

Reacting to the performance of the market, analysts at Cordros Research, stated that “given the outcome of the MPC meeting, we believe the hawkish stance of the MPC will continue to intensify risk-off sentiments in the local bourse, particularly among domestic investors.

However, we believe earnings releases from the banks and accompanying dividend declarations could trigger another wave of positive sentiments, supporting buying activities on the bourse”.

Meanwhile, the Financial Services Industry (measured by volume) led the activity chart with 1.329 billion shares valued at N32.924 billion traded in 20,897 deals; thus contributing 73.65 per cent and 63.27 per cent to the total equity turnover volume and value respectively.

The Conglomerates Industry followed with 106.728 million shares worth N1.467 billion in 2,368 deals while the Consumer Goods Industry recorded a turnover of 87.708 million shares worth N4.220 billion in 4,731 deals.

Trading in the top three equities namely Guaranty Trust Holding Company Plc, Zenith Bank Plc and Access Holdings Plc (measured by volume) accounted for 589.939 million shares worth N23.276 billion in 8,166 deals, contributing 32.70 per cent and 44.73 per cent to the total equity turnover volume and value respectively.