The Nigerian stock market commenced the first trading week of 2024 on a bullish note, witnessing gains across all sessions. The benchmark index surged by a substantial 6.5% week-on-week, breaking through the 79,000 points mark to close at 79,664.66 points. The positive momentum was driven by bargain hunting in blue-chip telecommunication stocks, particularly MTNN (+8.0%) and AIRTELAFRI (+6.0%). Sectoral performance was positive, with gains recorded in the Insurance (+14.1%), Banking (+10.3%), Consumer Goods (+4.4%), Industrial Goods (+3.6%), and Oil and Gas (+3.0%) indices.
The increased activity levels were reflected in a significant 139.2% week-on-week rise in the total traded volume, coupled with a 15.9% week-on-week increase in the total traded value. As the market positions for 2023FY earnings releases and accompanying dividends, investors are advised to seek opportunities in fundamentally justified stocks amid the challenging macro environment.
The overnight (OVN) rate contracted by 57 basis points week-on-week, settling at 14.9%. The system maintained a surplus liquidity position, closing with a net long position of NGN 159.30 billion. The expected net issuance of Nigerian Treasury Bills (NTBs) in the coming week may exert pressure on liquidity, potentially leading to an increase in the OVN rate.
Treasury Bills
Bullish sentiments prevailed in the Nigerian Treasury bills secondary market, supported by healthy system liquidity, leading to a contraction in average yields by 35 basis points to 6.4%. Next week, an anticipated liquidity squeeze may drive yields higher in the T-bills secondary market. Market focus is also expected to shift to the NTB Primary Market Auction (PMA) on Wednesday, where the Central Bank of Nigeria (CBN) plans to roll over NGN 56.56 billion worth of maturities.
Bonds
The Treasury bonds secondary market witnessed bullish sentiments as investors selectively picked attractive instruments across the curve. The average yield dipped by 41 basis points to 13.8%. Notable buying interest was observed in the APR-2029 (-95bps), JUL-2030 (-62bps), and JUL-2034 (-54bps) bonds. The fixed-income markets demonstrated resilience as market players navigated opportunities.
Analysts say overall, the Nigerian financial markets are off to a positive start in 2024, with the stock market displaying strength and fixed-income markets showing resilience amid evolving economic conditions.
Foreign transactions, accounting for 23.7% of gross transactions, surged by 113.9% month-on-month to NGN 71.37 billion, reaching the highest level since March 2020. This increase in foreign participation is likely linked to investor optimism about government reforms.
