The stock market swung back into positive territory yesterday following the retention of the Monetary Policy Rate, MPR, at 11.5 percent by the Central Bank of Nigeria, CBN, in its second Monetary Policy Committee, MPC meeting of the year.
Also, the return to bullish trading was coming at the backdrop of some positive corporate earnings as investors gained over N368 billion in the three trading days of the week.
Market capitalization which represents investors’ worth on the Nigerian Stock Exchange, NSE, close Wednesday at N20.449 trillion as against N20.081 trillion on Friday, while the NSE All-Share Index, ASI, went up by 1.8 percent to close at 39,085.78 points from 38,382.39 points on Friday.
The MPR is the baseline interest rate in the economy, with the current rate indicating a lower interest rate and availability of more cash in the money market.
Godwin Emefiele, CBN governor, on Tuesday, explained that increasing the MPR will increase the cost of borrowing and reduce access to credit for businesses which he said might reverse the growth trend of the economy.
Reacting to the stock market development analysts at Vetiva Securities Limited said, “With more corporate announcements likely to flood the market, we expect tomorrow’s session (Thursday) to follow a similar pattern to Wednesday, as investors react to the various financial performances and dividend announcements.
We anticipate further mixed activity along those lines.” Analysts at InvestData said: “The outcome of the MPC meeting, has played a very important role in determining the market trend, following which traders and investors should stay with fundamentally sound stocks.
“This is without prejudice to the fact that investors will respond sharply to unimpressive results from companies yet to present their scorecards, especially when dividend declared comes below expectation.”