Rates cut fails to lift NSE as index declines by 1.8%

30 November 2015, Lagos – The decision by the Central Bank of Nigeria (CBN)  to cut the Monetary Policy Rate (MPR) from  13 per cent to 11 per cent  failed to  lift the Nigerian equities market last week as the market closed in the red taking the while Year-to-Date (YTD) decline to 20.31 per cent.

Nigerian-Stock-Exchange.NSEThe CBN ended its Monetary Policy Committee (MPC) meeting in Abuja last week with a resolution to reduce MPR, which is the benchmark lending rate, from 13 per cent to 11 per cent. The CBN Governor, Mr. Godwin Emefiele, who announced the resolution of the Committee at the end of its meeting, also said members agreed to cut down on Cash Reserve Ratio for public and private sectors from 25 to 20 per cent.

Analysts and stakeholders had hoped that rates cut will force savers to move their monies to the stock market. Although the market rebounded day after the cut, that positive performance could not be sustained. The market bowed to sell pressure that was triggered by investors’ apathy that has reigned for some time.

During the week, the prevailing negative sentiments were reflective of the uncertainties that have largely overshadowed the markets all through 2015.
The market was volatile in four trading days of the week.

At the close of trades last week, the Nigerian Stock Exchange (NSE) All-Share Index(ASI) depreciated by 1.83 per cent and 1.81 per cent to close the week at 27,617.45 and N9.495 trillion respectively.

Similarly, all other indices finished lower during the week, except the NSE Insurance index, while NSE ASeM Index closed flat.

The market had the previous week dipped by 2.46 per cent after five consecutive days of negative returns which saw just eight  stocks out of 37 covered ending the week positive. This pushed the market’s YTD return to -18.83 per cent.

Meanwhile, analysts at InvestmentOne Limited maintained their stand that they expect the market to remain volatile in the near term, and advice investors to remain cautious

According to the analysts, “We continue to advise that investors with a medium to longer term horizon to take advantage of the currently depressed price levels and gradually build positions in quality names. Also, while we expect the market to remain volatile in the near term, we advise traders to remain cautious.”

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