Stocks hit more than five-year high, gain N710bn

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The Nigerian stock market sustained its positive outlook on Tuesday for the 12th trading session as the All-Share Index rose by 4.92 per cent to its highest in more than five years.

The market capitalisation of equities appreciated by N710bn to hit N15.11tn from N14.40tn as market sentiment remained in the green zone.

The premium subsector was the most active ; with 436.43 million shares exchanged by investors in 3,754 deals. According to Bloomberg, local investors have flocked to the stock market in search for returns as yields on government debt dropped after a surprise September rate cut aimed at stimulating the economy in Africa’s largest oil producer.

Market giant Dangote Cement Plc, which climbed 9.9 per cent, MTN Nigerian Communications Plc, up 5.7 per cent, and Zenith Bank Plc, which gained 9.5 per cent, were the three biggest contributors to Tuesday’s advance. “That is why the rally is not broad-based — few names across sectors have benefited from the rally,” said Ologunro. This “trend is different from what is expected whenever the market is bullish,” he said.

The rapid run-up in Lagos stocks has sparked at least one warning signal: the 14-day relative strength index on the benchmark equity gauge has climbed above 96, well above the level of 70 that signals to some technical analysts that the gains may be overdone and ripe for a correction. The market is looking the most overbought since August 2006.

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