The Nigerian stock market has recorded a significant gain of N216 billion following the Central Bank of Nigeria’s decision to cut its Monetary Policy Rate by 50 basis points to 27%.
This move has buoyed investor sentiment, driving the market’s positive momentum.
According to analysts, the rate cut is expected to support economic recovery by lowering borrowing costs and stimulating credit growth. “Looking ahead, we expect sentiment to improve further, supported by the more accommodative interest rate environment and the prospect of increased liquidity flows into equities,” analysts at Cordros said.
The Nigerian Exchange Limited’s All Share Index rose by 0.2% week on week, closing at 142,132.02 points. The market capitalization also increased by over N216 billion, reaching N89.960 trillion. Trading activity strengthened, with both volume and value advancing by 73.8% and 257.7% week on week, respectively.
Sectoral performance was mixed, with the Industrial Goods Index gaining 1.3%, Consumer Goods Index rising by 1.2%, and Banking Index increasing by 1.2%. In contrast, the Insurance Index dropped by 0.9%, and the Oil and Gas Index declined by 1.6%.
CBN Director of Monetary Policy, Victor Oboh, stated that the rate cut would impact the real economy significantly, supporting economic recovery and job creation. “What we expect is that this 50 per cent cut will put a smile on economic recovery, especially in the area of lowering the borrowing costs,” Oboh said.
The CBN’s decision to cut rates was driven by the sustained disinflationary trend, continued stability of the naira, and robust external reserves. Analysts expect the positive momentum to continue, driven by the accommodative interest rate environment and increased liquidity flows into equities.
The market’s upward trend is expected to be sustained, with analysts predicting a cautiously optimistic outlook for the coming week. “The upcoming Q3 earnings season is set to play a decisive role, particularly in banking and consumer names, with expectations of stronger results helping to sustain momentum,” Cowry Asset Management analysts said.
