High demand for some of the equities in the Nigerian Stock Exchange (NSE) Lotus Islamic Index (NSEL II) boosted the index to close in the positive territory last week after slipping into the red the previous week.
The Shari'ah index, which consists of companies in conformity with the principles of Shari'ah, had closed below its listing value the previous week, following losses recorded by some of the companies.
However, it witnessed a rebound last week, appreciating by 2.62 per cent, compared with a decline of 1.42 the previous week to close at 1,376.28. Consequently, the index traded 1.0 per cent above the listing value.
Market operators said the gain could be linked to appreciation recorded by some of the component stocks of the index. The index comprises 15 stocks including: Ashaka Cement Plc; Dangote Cement Plc; Larfage Cement Nigeria Plc, Nahco aviance Plc, Unilever Nigeria Plc Plc, Nestle Nigeria Plc, Cadbury Nigeria Plc, Cement Company of Northern Nigeria Plc.
Nestle, Dangote Cement Plc, and Lafarge Cement WAPCO were among some of the gainers last week.
The Shari'ah index is the first created to track the performance of Shari'ah compliant equities on the floor of the Nigerian bourse and it is expected to increase the breadth of the market and create an important benchmark for investments as the alternative non-interest investment space widens.
Speaking on the index, the Managing Director of Lotus Capital, Mrs. Hajarat Adeola, had said that the financial services sector and tobacco companies, gambling, alcoholic beverages and adult entertainment companies were excluded from the index.
According to her, the 15 stocks that made up the index, rigorously screened and would reviewed bi-annually to ensure their continuous compliance for inclusion.
She pointed out that 15 stocks met the eligibility requirements of Shari'ah advisory board.
Adeola added that the stocks in the index went through a two-stage screening process and those companies that passed the initial test were evaluated on the basis of Islamic financial screens to eliminate those with unacceptable levels of debt, cash and interest income.