In Nov-19, the domestic equity market halted its long-standing monthly bearish trend as the benchmark index, NSE-ASI, was up 2.4% m/m to settle at 27,002.2 points while YTD returns improved to -14.1% (Oct-19: -16.1%). Notably, the market traded up on 12-days out of the 20 trading days of the month. In all, market capitalization inched higher by N202.9bn m/m to close Nov-19 at N13.0tn.
The bullish performance was spurred by volatilities in the fixed income market as secondary market yields and primary market stop rates crashed to more than a 3-year low. Accordingly, we saw a renewed interest across the board, as all the sectors we track
closed the month in the positive region. Notably, the Banking sector recorded the highest gain, up 15.3% m/m.
In the month of December 2019, we expect the continued moderation in yield and increased net- inflows from OMO maturities to spur investors to demand local equities. Also, we anticipate further buying interest from institutional buyers amid year-end portfolio rebalancing. Looking at historical data, we observed that the m/m gains in December averaged 2.8% over the last 5 years, with the highest monthly gain coming in at 6.5% in 2016. Accordingly, we see the possibility of a Santa Claus rally in Dec-19. However, the anticipated bullish performance is unlikely to erase the current YTD loss.
United Capital Research