The Nigerian Stock market ended the month of January in positive territory as the All Share Index recorded a month to date return of 5.32%.
Stocks have continued with the bullish run which started in July 2020 culminating in a year-to-date return of 50.3% in December 2020 by far the best in the world. Investors will also not mind that the 5.32% return recorded in January is the lowest month to date return since August 2020.
Nevertheless, stocks got a flying start with about 20 stocks gaining more than 20% during the month alone. In total, 68 stocks posted gains during the month compared to losses from 20 stocks. Investors who purchased the top 10 best-performing stocks during the month gained at least 30% and above.
NSEASI Closed Green in 9 Out of 12 Months in 2020
The Nigerian Stock Market recorded an unimpressive performance in Q1 2020 with a -20.65% lossrecorded. Positive market sentiment further permeated the market in subsequent quarters as investors renewed bargain hunting on the NSE bourse. The NSEASI inched up by +14.92% and +9.61% in Q2 and Q3 2020 respectively.
The index inched up further by +50.09% in Q4 2020 as the market closed the year with a return of +50.03%
Monthly, the market closed in the green in nine (9) out of the twelve (12) months. The highest monthly gain was recorded in December 2020 with +50.09% while the highest loss was recorded in March 2020 with -18.75% loss recorded.
Sectorial Performances
In terms of indices, the insurance sector led the way with a whopping return of about 29.77% one of its best months in years. The sector is in a recapitalization mood, so it was not surprising to see most stocks gain impressively. By our estimates, 9 insurance stocks posted a return of at least 10% and in January.
AIICO, Mansard, Custodian, and NEM Insurance were included as stock picks last year by analysts . They have each returned +33%, 33%, 2.6%, and 25% respectively.
Though not a separate index, telecom giants, MTN and Airtel also enjoyed a rewarding January as their share prices rose by 8% and 9% respectively, taking them to new year highs. MTN was recommended by analysts for a buy-in may last year when it was just N107.4. It has gained over 68% since then.
Cement company Lafarge which closed at N30 per share is among the best performing stock in the month of January posting a return of 43% one of the best stocks last month. The stock was also included as a stock pick when it was selling for just 11.75 providing our subscribers with a return of 155.3%.
Just last week we recommended Consolidated Hallmark Plc (CHI Plc) at 37 kobo. The stock gained 18% during the week and is close to hitting our target exit price of 45 kobo per share.
Is January a bellwether?
The Month of January is hardly a bellwether for what to expect throughout the year but if data is anything to rely on then stocks have ended the year on a positive note 19 times out of 24 whenever January ends with a positive return.
This suggests the year has more chances of closing positively than negatively. However, this is merely statistical, and not certain that stocks will close positively.
In fact, in the last 10 years where stocks have closed positively in January, the year has gone on to close negatively 2 out of 6 times.
And as we have stated often on Nairametrics, the drive for the Nigerian Stock market performance this year will be the exchange rate, interest rates, and oil prices.
