November was a successful month for investors in the stock market, with capital gains reaching N1.013 trillion. These encouraging figures demonstrate investor confidence and their desire to take advantage of the seasonal trends emerging this month.
Market capitalization, which represents the total value of investments on the Nigerian Exchange Limited, closed November at N39.051 trillion, up from N38.038 trillion recorded at the end of October.
Analysts believe that despite limited foreign investment flows, effective coordination of fiscal and monetary policies will limit inconsistencies and reversals of decisions. Additionally, realistic economic reforms and structural adjustments will help further stimulate the market.
In terms of weekly development, the NGX All Share stock index increased by 0.3%, from 71,230.48 points to 71,419.87 points. This positive development has enabled the market to achieve growth of 39.4% since the start of the year.
Trading volumes also saw an increase of 4.9% compared to the previous week, while total trading value increased by 70.5%.
Sector performance was mixed, with the banking index up 1.9% and the oil and gas index up 6.0%. On the other hand, the insurance index fell by 2.0%, the industrial goods index by 1.2% and the consumer goods index by 0.5%.
Analysts at Cordros Research highlighted that caution should prevail in the market given the absence of significant positive catalysts. They also highlighted the need for investors to position themselves in stocks that are fundamentally justified given the weak macroeconomic backdrop affecting corporate profits.
According to analysts at InvestData Consulting Limited, market sentiment is expected to be mixed, with an uptrend encouraged by global developments, bond yield environment, Central Bank of Nigeria outlook and earnings reports. They also highlighted the need for portfolio readjustment in anticipation of seasonal trends in December. Additionally, market appeal remains strong, with dividend growth opportunities and upside potential in undervalued stocks.
In conclusion, even if profit taking and corrections are to be expected after the recent bullish period, the growth potential remains attractive. Fundamentally strong stocks are still undervalued, while the dividend yields of major stocks continue to hold appeal despite the recent market rally.