Nigeria’s Stock Market Rallies as Monetary Policy Committee Meeting Looms
Abuja, Nigeria – As the Central Bank of Nigeria’s Monetary Policy Committee (MPC) convenes today, the Nigerian Exchange Limited (NGX) has sustained a positive momentum, with the stock market capitalization gaining N455 billion. The NGX All Share Index (ASI) rose by 0.8% to close at 98,247.99 points, up from 97,456.62 points the previous week.
Analysts are speculating about the direction of the monetary policy, particularly the new Monetary Policy Rate (MPR), which is the benchmark for lending interest rates. The CBN is expected to maintain the existing rate, considering the slowing down of inflation.
In the stock market, key stocks such as Geregu Power, Fidelity Bank, and MTNN recorded significant gains, driving the market’s positive performance. The strong demand for these stocks has been a major factor in the market’s rally.
Ahead of the MPC meeting, analysts at Cordros Research have opined that the committee will likely consider global and domestic economic developments since the last policy meeting. They noted that 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 (petrol) and efforts by the CBN to stabilize the naira.
Consequently, Cordros Research expects the CBN to adopt a cautious stance, likely opting to maintain the interest rate to support economic stability. The analysts predict that the MPC will “hold” the MPR at 26.25% and retain all other policy parameters.
Meanwhile, analysts at InvestData Consulting Limited have forecast a mixed sentiment in the market, with investors repositioning their portfolios ahead of quarter-end and Q3 earnings season. They expect profit taking and bargain hunting to continue as sector rotation continues in the market.
The analysts believe that portfolio repositioning is ongoing, with investors taking advantage of pullbacks to buy into value stocks. They noted that volatility and pullbacks add more strength to upside potential in the market.
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