Nigerian stock rally loses steam

The Nigerian stock market has been on a rollercoaster ride, with the NACR index experiencing a nine-day rally before a slight dip of about 1.1% to close at 32,200 points. This fluctuation has led investors to question whether this is just a temporary breather or a sign of a more significant trend. Abiodun Keripe, Head of Research and Strategy at Elixir Investment Partners, shed some light on the current market movement during an interview on CNBC Africa. The recent rally in the Nigerian stock market has been driven by a combination of external and internal factors. One of the key drivers mentioned by Keripe is the changes in the foreign exchange market, which have attracted foreign investors back to the market. Additionally, positive trends in inflation figures, GDP growth, and corporate financial results have contributed to the optimistic sentiment in the market. Despite the recent gains, there are still opportunities for further growth in the market. Keripe believes that certain stocks are reaching their true value, while others still have room to grow. He highlighted lower-priced stocks such as Access Bank, UBA, and FBN Holdings as potential movers in the near future. Additionally, sectors like cement and agriculture, represented by companies like WAPCO, Presco, and Home, are also seen as having potential for growth. While investors are cautiously optimistic about the market outlook, risks in the banking sector remain a concern. Keripe noted that while the risks have diminished with improvements in oil prices and the economy, they are still present. However, the recent momentum in the market has overshadowed some of these concerns, leading to a more positive outlook. Key indicators to watch in the market include trading volumes, the number of trades, and the breadth of movement across different sectors. The market has seen a more widespread upward trend in the past weeks, indicating a more stable growth pattern. Overall, the Nigerian stock market's recent performance reflects a mix of external and internal economic factors. While challenges persist, such as lingering risks in the banking sector, the market continues to show signs of stability and growth potential. Investors are advised to keep a close eye on key indicators and sector movements to navigate the evolving landscape of the Nigerian stock market.