Nairobi Securities Exchange Posts Measured Gains as Trading Activity Improves and Sector Leadership Shifts

The Nairobi Securities Exchange (NSE) recorded a cautiously positive performance in the week ending January 23, 2026, with most equity indices closing higher amid improved trading activity and a noticeable rotation in sector leadership. The gains, however, came against a familiar backdrop for the Kenyan market: persistent foreign investor outflows and selective pressure on heavyweight counters.

While the advances were modest in headline terms, the underlying market dynamics told a more nuanced story. Turnover expanded meaningfully, liquidity remained concentrated in a handful of stocks, and domestic participation continued to anchor activity as offshore investors reduced their pace of selling. At the same time, fixed income trading stayed elevated, signaling that investors remain actively repositioning across asset classes rather than retreating to the sidelines.

Taken together, the week’s performance reflects a market that is stabilizing rather than surging—one that is absorbing macroeconomic signals, corporate fundamentals, and global cues in a measured, risk-aware manner.

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Equity Indices Edge Higher as Breadth Improves

The NSE’s broad market barometer, the All Share Index (NASI), rose by 0.38% to close at 194.60 points, adding 0.73 points over the week. The advance indicated incremental gains across a wide range of listed counters rather than a rally driven by a single stock.

Similarly, the NSE 20 Share Index, which tracks long-established blue-chip companies, gained 0.33% to settle at 3,267.15 points. The NSE 25 Index, which blends liquidity and market capitalization considerations, climbed 0.40% to 5,301.84 points.

In contrast, the NSE 10 Index, which is more heavily skewed toward a narrow group of large-capitalization stocks, slipped by 0.30% to 2,028.78 points. This divergence underscored ongoing pressure in select heavyweight names even as the broader market found support.

Market capitalization mirrored the modest upward move in prices, rising 0.38% to approximately KSh 3.07 trillion. While the increase was incremental, it reinforced the sense that the market is gradually rebuilding value after prolonged periods of volatility in recent years.

Banking Sector Reasserts Its Influence

One of the most notable developments during the week was the renewed strength of the banking sector. The Banking Index advanced 1.01% to 215.78 points, outperforming the broader market and reaffirming banks’ central role in driving liquidity and investor interest at the NSE.

Banking stocks accounted for more than half of total equity turnover during the week, contributing KSh 1.70 billion, or 54.82% of traded value. This dominance is consistent with long-standing patterns at the NSE, where banks are among the most liquid, best-researched, and most actively traded counters.

The sector’s resilience is underpinned by several structural factors: relatively stable earnings, strong capital buffers, improving asset quality, and the sector’s sensitivity to interest-rate expectations. With the Central Bank Rate holding steady, banks continue to benefit from predictable funding conditions and steady margins.

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Trading Activity Strengthens as Turnover Jumps

Beyond index performance, one of the clearest signs of improving market health was the pickup in trading activity. Weekly equity turnover rose by 24.65% to KSh 3.20 billion, up from KSh 2.57 billion the previous week. Volumes also edged higher by 0.82% to 79.84 million shares.

This increase in value traded, even as volumes rose modestly, suggests that investors were increasingly active in higher-priced and more liquid counters rather than low-value speculative trades.

However, trading concentration also increased. The top five stocks accounted for 68.41% of total market turnover, up sharply from 58.61% the previous week. While concentration is not unusual at the NSE, elevated levels highlight the market’s continued dependence on a small group of dominant names for liquidity.

Heavyweights Dominate Turnover

At the individual stock level, activity was led by a familiar lineup of large-capitalization counters.

Stanbic Bank Kenya topped the turnover table with KSh 524.7 million traded during the week. Despite the strong activity, the stock closed 1.00% lower at KSh 198.00, reflecting profit-taking rather than a shift in fundamentals.

Safaricom, the NSE’s most capitalized stock, followed closely with KSh 487.2 million in turnover. The counter edged down 0.17% to KSh 29.65, continuing a pattern of heavy trading volumes paired with relatively narrow price movements.

Equity Group Holdings recorded KSh 448.7 million in turnover and closed 0.36% lower at KSh 68.75, while KCB Group traded KSh 378.9 million and slipped 1.11% to KSh 66.75.

Rounding out the top five was BAT Kenya, which posted KSh 350.6 million in turnover and ended the week marginally lower.

The prevalence of these counters underscores the role of institutional investors—both local and foreign—who typically concentrate activity in liquid, fundamentally strong stocks.

Exchange Traded Funds and the Gold Effect

Outside traditional equities, exchange-traded products featured prominently. The Absa New Gold ETF emerged as one of the most actively traded instruments of the week, accounting for KSh 256.7 million in turnover.

The ETF posted a striking 81.44% gain following price adjustments linked to movements in the underlying gold price. While the magnitude of the increase reflects technical adjustments rather than pure speculative demand, it highlights growing investor awareness of alternative instruments at the NSE.

Gold-linked products tend to attract attention during periods of global uncertainty or when investors seek inflation hedges and portfolio diversification. Their rising visibility at the NSE points to a gradual broadening of the Kenyan capital market beyond traditional equity and bond instruments.

Sector Performance: Manufacturing and Telecommunications

In the manufacturing sector, turnover reached KSh 430.1 million, driven largely by BAT Kenya. Meanwhile, East African Breweries (EABL) declined 3.60% to KSh 240.75 on turnover of KSh 72.5 million, making it one of the notable laggards for the week.

The telecommunications segment remained effectively a single-stock story, with Safaricom accounting for virtually all activity. Total sector turnover stood at KSh 487.2 million, underscoring the company’s outsized influence on both sectoral and overall market performance.

Gainers and Losers Reflect Selective Risk Appetite

On the gainers’ board, the New Gold Issuer (RP) topped the list with an 81.44% increase, followed by Kenya Airways, which surged 41.10%. The rally in Kenya Airways reflected renewed speculative interest and optimism around restructuring prospects, a pattern that has repeated periodically over the past decade.

NCBA Group gained 8.33%, while Unga Group rose 6.67% and Eaagads added 5.62%.

On the downside, BOC Kenya led losses with a 9.04% decline. East African Portland Cement fell 4.99%, TPS Serena eased 4.19%, while EABL and Liberty Kenya also recorded notable declines.

The mixed performance illustrates a market where investors are highly selective, rewarding specific turnaround narratives and earnings visibility while trimming exposure to counters facing margin pressure or slower growth.

Foreign Investors: Outflows Persist but Moderate

Foreign investor sentiment showed signs of stabilization, though it remained negative overall. Total foreign purchases amounted to KSh 622.2 million, while sales reached KSh 1.21 billion, resulting in a net outflow of KSh 583.3 million.

Importantly, this marked a significant moderation from the previous week’s net outflow of KSh 1.10 billion. Foreign participation accounted for 34.83% of total market turnover, highlighting the continued influence of offshore investors even as domestic players provide a liquidity backstop.

Historically, periods of sustained foreign outflows at the NSE have coincided with global risk-off environments, tightening financial conditions, or currency concerns. The recent moderation suggests that while foreign investors remain cautious, the pace of capital flight is easing.

Fixed Income Market Remains Highly Active

Activity in the fixed income segment remained robust. Bond turnover rose 10.43% to KSh 83.57 billion, while the Bond Index edged up 0.11% to 1,164.72 points.

The steady index performance points to stable yields amid strong demand for government securities. This aligns with broader trends seen over the past year, where investors have increasingly favored bonds for income and capital preservation in a relatively stable interest-rate environment.

By contrast, the derivatives market cooled further, with 570 contracts traded worth KSh 3.24 million—down sharply from the prior week. The subdued activity reflects limited retail participation and cautious positioning in leveraged instruments.

Macro Environment: Stability as an Anchor

Macroeconomic conditions remained broadly unchanged during the week. The Kenyan shilling held steady at 129.03 against the US dollar, signaling relative stability in the foreign exchange market.

Short-term interbank rates, as measured by KESONIA, stood at 8.96%, while the Central Bank Rate remained at 9.00%. Inflation was steady at 4.49% in December, comfortably within the central bank’s target range.

This stable macro backdrop has been critical in anchoring investor expectations. Historically, sharp currency swings or inflation spikes have amplified volatility at the NSE. The current environment, by contrast, provides a foundation for gradual capital market normalization.

Why This Matters: Interpreting the Signals

The week’s developments matter not because of the size of the gains, but because of what they reveal about market behavior.

First, the pickup in turnover alongside modest index advances suggests improving confidence rather than speculative excess. Second, the dominance of banking stocks highlights investor preference for earnings visibility and balance-sheet strength. Third, the moderation in foreign outflows indicates that external pressures, while still present, may be easing.

From a historical perspective, similar patterns have often marked transition phases—periods where markets move from defensive positioning toward selective risk-taking. The gradual broadening of instruments, including ETFs, also points to a maturing market structure.

For policymakers, fund managers, and retail investors alike, these signals provide valuable insight into capital flows, sector preferences, and risk appetite at a time when global financial conditions remain fluid.

Looking Ahead

As the year progresses, the NSE’s trajectory will continue to be shaped by a mix of domestic fundamentals and global developments. Corporate earnings, fiscal policy execution, interest-rate expectations, and foreign investor behavior will remain key variables.

While challenges persist, the market’s recent performance suggests resilience rather than retreat. The steady accumulation of liquidity, the stabilization of macro indicators, and the re-engagement of investors—even cautiously—offer grounds for measured optimism.

In that sense, the week ending January 23, 2026, may be remembered less for its headline gains and more for what it signaled: a market finding its footing in an environment defined by prudence, patience, and incremental progress.

photo source: Google

By: Elsie Njenga

26th January,2026