Nigerian Stocks Surge to New High Amid Caution Signals

Nigerian stocks hit a new high during the first trading session of the week, surpassing N120 trillion to close at N122 trillion, marking a substantial N5 trillion return on investment. The market experienced its strongest daily gain since May 23, 2023, driven by price rallies in Dangote Cement (NGX: DANGCEM), Nestlé Nigeria, and MTN Nigeria.

The Nigerian Exchange (NGX) All-Share Index (ASI) rose by 7,949.36 basis points, or 4.36%, closing at 190,262.44 points. Year-to-date returns for MTN Nigeria and Dangote Cement increased by 15.1% and 22.3%, respectively.

The market valuation grew by N5.103 trillion. However, analysts indicated that the market is showing overbought signals, with many blue-chip stocks exceeding a relative strength index of 70-75.

The Nigerian Pension Commission's decision to raise equity investment limits contributed to the current overbought situation. Despite these signals, the market remains optimistic, with a breadth of 54 advancing stocks against 28 declining stocks.