Market Rallies amid MPC Expectations

The equities market halted a 6-day bearish run at the end of Tuesday’s trading session amid MPC expectations as well as rally in Tier-1 banks.

The All Share Index rose 1.1% to close at 27,945.02 points whilst market capitalization closed at N9.6tn as investors gained N108.2bn. Today’s market performance was largely buoyed by banking stocks – GUARANTY (+5.0%), ZENITH (+4.7%) and ETI (+8.4%). Market activity was however mixed as volume traded dipped 24.3% while value traded rose 3.2% to settle at 286.7m units and N2.3bn.

Mixed Performance across Sectors
Amidst mixed sector performance, the Banking index (+4.9%) led sector gainers as a result of bargain hunting in GUARANTY (+5.0%), ZENITH (+4.7%) and ETI (+8.4%). The Insurance index (+0.9%) trailed on the back of 4.9% and 1.4% appreciation in MANSARD and AIICO whilst the uptrend in NIGERIAN BREWERIES (+1.1%) and HONYFLOUR (+4.6%) pulled the Consumer Goods index 0.4% northwards. On the other hand, The Oil & Gas and Industrial Goods indices declined 0.3% and 0.2% as a result of depreciation in SEPLAT (-5.0%), ETERNA (-2.1%) and WAPCO (-0.4%).
FBNH H1:2016; Non-Interest Income Up 52.0%
FBNH submitted its H1:2016 result today reporting a 1.2% dip in gross earnings to N267.9bn. The Bank recorded an impressive 52.0% growth in Non-interest income to N94.1bn but PAT declined 10.5% to N35.9bn. Consequently, FBNH rallied 3.5% as investor sentiment towards banking stocks strengthened with 5 banking stocks making the list of top 10 performers.

Market breadth (advancers/decliners ratio) closed at 1.6x (from 1.5x on Monday) as 23 stocks advanced against 14 decliners. OANDO (+10.1%), ETI (+8.4%) and ACCESS (+7.5%) led the gainers while AIRSERVICE (-5.6%), SEPLAT (-5.0%) and 7UP (-4.6%) led the laggards.

In line with our expectation, the MPC voted to raise MPR by 200% to attract foreign capital inflow which is yet to react to the recent reforms in the FX market while keeping other rates unchanged. We view this as positive for the market given that increased capital inflow will have a positive feedback effect on the financial market.