Nigerian Equities Set to Sustain Gains Amid Strong Half-Year Earnings Expectations

The Nigerian equities market is poised to maintain its bullish trajectory, bolstered by heightened investor expectations for robust half-year (H1) corporate earnings. Positive sentiment has surged, leading to increased capital inflow despite broader economic challenges. This optimism is largely driven by improved inflation figures and a strategic shift toward blue-chip stocks in banking, industrial, and consumer goods sectors.

According to United Capital Plc, the market is expected to post marginal gains this week, fueled by investor positioning ahead of Q2 earnings. Investors are likely to focus on companies demonstrating foreign exchange (FX) gains, sound cost management, clear growth potential, and attractive interim dividend prospects. While optimism persists, profit-taking activities and the Nigerian Treasury Bills (NT-Bills) auction may slow momentum.

Afrinvest Limited echoed this sentiment, noting continued investor interest as the corporate earnings season begins. Cowry Assets Management added that market sentiment may remain mixed pending the Central Bank of Nigeria’s Monetary Policy Committee (MPC) meeting in July. They suggest that recent declines in food and core inflation could support a policy hold, but overall market direction remains uncertain, balancing between a minor correction and further gains.

Technically, the Nigerian Exchange (NGX) All-Share Index (ASI) is in overbought territory, with the RSI at a high 92.41, pointing to a possible pullback. Nevertheless, the ASI remains above key moving averages, indicating market resilience. Cowry Assets advises cautious optimism, urging investors to focus on fundamentally sound stocks as Q2 earnings draw near.

Last week’s trading activity showed strong market performance, with the NGX ASI breaching the 131,000 mark to close at 131,585.66 points—a 4.31% weekly gain. Market capitalization climbed by N3.44 trillion to N83.241 trillion. Gainers outpaced losers, with notable performances from Eunisell Interlinked, BUA Cement, and Associated Bus Company. Meanwhile, Academy Press and RT Briscoe led the laggards, reflecting pockets of sectoral volatility amid the broader rally.

Source: Leadership