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.
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See the chart below
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.
Nairametrics Stock Select Newsletter (SSN) included AIICO, Mansard, Custodian, and NEM Insurance as stock picks last year. They have each returned +33%, 33%, 2.6%, and 25% respectively.
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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 Nairametrics 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 in Nairametrics SSN 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.
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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.
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Stocks to watch
- FUGAZ
- Caverton
- CHI
- Julius Berger
- Transcorp Plc
- NASCON
- Presco
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