The Nigerian Exchange Limited (NGX) experienced a decline last week as the stock market responded unfavorably to the recent interest rate hike implemented by the Central Bank of Nigeria (CBN). The Monetary Policy Committee (MPC) of the central bank raised the benchmark interest rate, known as the Monetary Policy Rate (MPR), by 25 basis points, increasing it from 27.25% to 27.5%. This marks the sixth consecutive increase this year, totaling an increase of 875 basis points from the 225 basis points recorded in 2023.

In light of the MPC's decision, the NGX All-Share Index (ASI), a key performance indicator, fell by 0.3% week-on-week, closing at 97,507.87 points, down from 97,829.02 points the previous week. The market was notably affected by sell-offs in Seplat, which dropped by 6.0%, GTCO by 3.0%, and MTN Nigeria by 1.2%. Conversely, WAPCO saw a gain of 7.4%, Oando increased by 6.7%, and FBNH rose by 3.5%.

Despite the downturn, market activity during the week was vigorous, with trading volume and value increasing by 63.6% and 52.8% week-on-week, respectively. Sector performance was varied; the Oil & Gas sector fell by 1.9%, the Consumer Goods Index decreased by 0.4%, and the Banking Index declined by 0.3%. In contrast, the Insurance Index rose by 1.2%, and the Industrial Goods Index increased by 0.8%.

On a month-on-month basis, the market saw a slight decrease of 0.1%, resulting in a loss of N64 billion in market capitalization, which ended the week at N59.207 trillion, down from N59.271 trillion at the end of October 2024. Year-to-date, the market has recorded a gain of 30.4%. 

In response to the market outlook, analysts at Cordros Research noted that cautious trading is likely to continue this week due to the lack of significant positive catalysts to enhance market sentiment.

Analysts from InvestData Consulting Limited shared their insights, indicating that they expect a blend of sentiments to persist as market participants evaluate the implications of the recent interest rate hike. They noted that investors are likely to adjust their portfolios in light of profit-taking, bargain hunting, attractive valuations, and strategic positioning by knowledgeable investors as the year comes to a close.