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Like all other stock markets around the world, Nigeria’s stock market index has had its fair share of ups and downs. Against this backdrop, the level of growth that has been recorded in recent times is considered a welcome development by many. A stock market index is a method of measuring a section of the stock market. It is a compilation of stocks constructed in such a manor to track a particular market, sector, commodity, currency, bond, or other asset. An index may also be referred to as an instrument (after all it can be traded) which derives its value from other instruments or indices. The index may be weighted to reflect the market capitalization of its components, or may be a simple index which merely represents the net change in the prices of the underlying instruments. Stock market indices may be classed in many ways. A ‘world’ or ‘global’ stock market index includes (typically large) companies without regard for where they are domiciled or traded. A ‘national’ index represents the performance of the stock market of a given nation—and by proxy, reflects investor sentiment on the state of its economy. More specialised indices exist tracking the performance of specific sectors of the market. Other indices may track companies of a certain size, a certain type of management, or even more specialized. Many indices are cited by news or financial services firms and are used as benchmarks, to measure the performance of portfolios such as mutual funds. Nigeria’s all share index on Wednesday closed near a one-year high on rising 1.16 percent, lifted by strong half-year earnings from banks and cement firms, and an increase in foreign capital inflows. The index rose to 23,329 points, the highest close since August 5 last year, when it reached 23,397 points. Nigeria’s index has gained almost 12 percent year-to-date, recouping earlier losses it sustained due to dwindling oil prices in May and weak global risk appetite in the wake of ongoing European economic turmoil. Top gainers on Wednesday include Dangote Cement, rising 3.51 percent to 114.02 naira. Others were Zenith Bank up 3.89 percent and FCMB up 2.24 percent.

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This article was first published on 3rd August 2012 and updated on August 6th, 2012 at 2:59 pm

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