Emmanuel OchayiNigeria’s stock market saw a 0.18% increase on Tuesday, adding N104 billion in value despite the Central Bank of Nigeria’s (CBN) recent hike in the Monetary Policy Rate (MPR).
The equity market has continued to grow this week, rising 0.33%, and 2.06% for the month. Investors’ confidence appears to be unaffected by the CBN’s aggressive policy changes as they shift focus to key sectors such as banking and consumer goods.
Join our WhatsApp Channel“The stock market has shown resilience even in the face of tightening monetary policy,” said financial analyst Chika Nnadi. “Investors seem to be targeting sectors that remain strong despite the economic adjustments.”
Investors Continue to Focus on Banking Stocks
The stock market’s positive performance aligns with analysts’ predictions that investors would concentrate on banking and consumer goods stocks.
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On Tuesday, Chapel Hill Denham Nigeria Infrastructure Debt Fund (NIDF) led the gains, rising 9.94%, while FBN Holdings followed with a 9.93% jump. Fidelity Bank also surged by 9.7%, making the banking sector a key driver of the stock market’s upward movement.
“Banking stocks are proving to be safe bets for investors,” remarked trader Osas Odemwingie. “The resilience of these stocks is giving the market a boost despite the CBN’s efforts to control inflation through higher rates.”
CBN Hikes Rates to Rein In Inflation
On Tuesday, the CBN raised its benchmark interest rate by 50 basis points to 27.25%, its fifth consecutive hike this year. The Cash Reserve Ratio (CRR) for commercial banks was also increased by 500 basis points to 50%. These actions are part of the CBN’s ongoing efforts to combat inflation, which remains a concern in the Nigerian economy.
“The Central Bank had to make this tough call,” said Olamide Bassey, a market commentator. “Inflation has been stubborn, and raising the rates again was their only option, but the stock market seems to be shrugging it off, at least for now.”
Stock Market Performance and Sector Gains
The Nigerian Exchange Limited (NGX) All-Share Index (ASI) climbed from 98,386.6 points to 98,568.59 points. The equities market capitalisation also increased to N56.64 trillion, further lifting the market’s year-to-date return to +31.82%. Stocks in banking, consumer goods, and infrastructure remain the focus for many investors.
Some of the top performers included Ellah Lakes, which rose by 9.76%, and Transcorp, Fidelity Bank, and UBA, which all saw heavy trading. In total, 12,081 deals were made on Tuesday, with 763 million shares exchanged, worth N11.78 billion.
“This kind of broad-based rally shows that investors are still very much in the game, even if the macroeconomic environment is tough,” said Odemwingie.
Analysts Predict Continued Growth in the Stock Market
As the week progresses, many analysts are optimistic that the Nigerian stock market will maintain its upward trajectory. However, some caution that the long-term effects of the CBN’s tightening monetary policy could slow the growth in the future.
“There’s a lot of optimism right now, especially in sectors like banking and consumer goods,” said Nnadi. “But we’ll have to keep an eye on how inflation trends and how further rate hikes could impact investor sentiment.”
Despite the headwinds posed by rising interest rates, the Nigerian stock market’s performance suggests that investors remain focused on sectors with strong fundamentals. Whether this trend will continue as the CBN adjusts its policies remains to be seen, but for now, the stock market shows no signs of slowing down.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
