In apparent speculation over the direction of the monetary policy as the Monetary Policy Committee, MPC of the Central Bank of Nigeria, CBN, holds today, the stock market has sustained positive momentum on the Nigerian Exchange Limited, NGX.
The MPC will decide the new Monetary Policy Rate, MPR, which is the benchmark used by financial institutions to fix the interest rate for lending to their customers.Meanwhile, some analysts forecast that the CBN would maintain the existing rate in view of the fact that inflation has been slowing down.Activities of the stock market last week showed that the NGX All Share Index, ASI, went up by 0.8% to close at 98, 247.99 points from 97,456.62 points it closed the previous week.Similarly, another stock market gauge, market capitalization, gained N455 billion to close at N56.466 trillion from N56.001 trillion in previous week.
The strong demand for key stocks such as Geregu Power that gained 15.00% Week on Week, WoW, followed by Fidelity Bank (4.20%) and MTNN (3.95%), supported the market’s positive performance. Commenting about the MPC meeting, analysts at Cordros Research said: “Like in previous meetings, we expect the Committee to consider developments in the global and domestic economy since the last policy meeting. On the global scene, major central banks are easing monetary policies as headline inflation trends closer to target levels. ‘‘Domestically, Nigeria’s GDP growth remains resilient, while headline inflation has decelerated for two consecutive months.‘‘However, near-term pressures suggest a potential uptick due to the substantial increase in the base price of PMS (+50.5% to NGN855.00/litre). ‘‘Additionally, we point out recent efforts by the CBN to stabilise the naira amid the persisting demand pressure. ‘‘Consequently, we expect the CBN to adopt a cautious stance, likely opting to maintain the interest rate to support economic stability. Our baseline expectation is that the MPC will “HOLD” the Monetary Policy Rate (MPR) at 26.25% and retain all other policy parameters.”
Analysts at InvestData Consulting Limited foresee a blend of sentiments persisting in the market as investors adjust their portfolios in anticipation of the upcoming quarter-end and Q3 earnings season. This adjustment is amidst profit-taking and bargain hunting strategies, with hopes pinned on the influx of half-year numbers from other dividend-paying stocks. The market is witnessing ongoing sector rotation, prompting investors to capitalize on dips to invest in promising opportunities.
