Stock market snaps winning streak after MPC verdict

Nigeria’s stock market retreated on Tuesday by 0.92 percent after Monetary Policy Committee (MPC) verdict.

Rising from its 304th meeting held from February 23 to 24, the Monetary Policy Committee cut the Monetary Policy Rate (MPR) by 50 basis points (bps) to 26.50 percent.

The MPC also adjusted the asymmetric corridor to +50/-450bps around the MPR; retained the Cash Reserve Ratio (CRR) for Deposit Money Banks to 45 percent; retained the CRR for Merchant Banks at 16 percent; and maintained the Liquidity Ratio at 30 percent.

Investors shifted to a cautious stance following the MPC decisions despite the market’s record-breaking run this year—which saw the All-Share Index (ASI) cross the 194,000-point milestone.

Large-cap, consumer goods and insurance stocks bore the brunt of the sell-off as traders re-evaluated their positions after MPC decisions, thereby moderating returns this year to 24.98 percent.

The NGX All Share Index (ASI) decreased to 194,484.61 points while the value of listed stocks decreased to N124.827 trillion.

Activity level in the stock market was mixed with the total value of stocks traded rising by 92.58 percent to settle at N53.35billion. Meanwhile, the total volume of stocks traded fell by 4.94 percent to settle at 1.14billion units.

“As we head into mid-week, the market appears to be entering a period of consolidation. The divergence between the gaining sectors (Banking and Industrials) and the retreating Consumer Goods space suggests that investors are rotating capital into value names with upcoming dividend triggers,” according to Vetiva research analysts in their February 24 post-trading commentary.

“We expect to see continued volatility as traders balance high-conviction buying in select tickers against the urge to lock in profits from the month’s 17.60 percent Month-to-Date (MtD) appreciation,” the analysts further noted.

Meristem Research analysts had ahead of MPC decision noted that lower rates would likely encourage more allocation of funds into the equities market, “particularly as investors search for stronger real returns.”

Iheanyi Nwachukwu

Iheanyi Nwachukwu, is a creative content writer with almost two decades journalism experience writing on banking, finance, capital markets, and tax. The multiple awards winning journalist is Assistant Editor, BusinessDay. Iheanyi holds BSc Degree in Economics from Imo State University; Master of Science (MSc) Degree in Management from University of Lagos. Iheanyi has attended several work-related trainings including (i) Advanced Writing and Reporting Skills (Pan African University, Lagos); (ii) News Agency Journalism (Indian Institute of Mass Communication {IIMC}, New Delhi, India); and (iii) Capital Markets Development and Regulations (International Law Institute {ILI} of Georgetown University, Washington DC, USA). Other trainings Iheanyi attended include: Economic/Political Risk Analysis (By Thomson Reuters Foundation); International Financial Journalism (IFJ) (By PMA Media Training, UK); Effective Business Writing Skills (By Phillips Consulting); Reporting on Corporate Governance (By International Finance Corporation (IFC) & Thomson Reuters Foundation UK); etc. In addition, he has participated in high-level economy & markets events in Dubai, South Africa, Morocco, and other African countries like Zambia, Ghana and Gambia.