The Nairobi Securities Exchange (NSE) was on an upward trajectory during the month of February 2026, with the major indices recording double-digit gains, buoyed by local retail investors.

The Nairobi All Share Index (NASI) rose by 10.6% to close at 216.08 points from 195.36 points recorded in the previous month. The gain was mainly driven by advances in large-cap stocks, including Stanbic Holdings, KCB Group, and DTB-K which, gained 29.5%, 20.7%, and 20.0%, closing at KES 256.5, KES 80.25, and KES 154.75, respectively. The index is now up 20.33% year-to-date.

The NSE 10, which tracks the top ten listed companies, gained 10.8% to 2,268.39 points, while the NSE 20 climbed 13.7% to 3,750.45 points from 3,299.28 points in the previous month. Similarly, the NSE 25, edged up 11.8% settling at 5,948.29 points. The Banking sector index recorded the strongest performance, rising 14.4%, to close the month at 245.9 points.

Trading activity surged significantly during the month. The volume of shares traded surged in the month largely driven by the launch of Ziidi Trader platform. The platform has enhanced market accessibility by allowing investors to buy and sell shares directly at the NSE through the M-PESA application on their phones. Consequently, equity turnover soared, while market capitalization rose by 10.6% to KES 3.4 trillion from KES 3.1 trillion, highlighting improved investor confidence.

NSE Top Gainers

Retail chain Uchumi Supermarket emerged the top gainer, appreciating by 130.7% to KES 2.93, driven by speculative trading. Flame Tree Group followed at distance, gaining 59%. Sasini PLC and Eaagads PLC rose by 42.9% and 36.8%, respectively.

NSE Top losers

On the downside, Eveready PLC shed the most, declining by 18.7% to close the month at KES 1.13. Other notable decliners included BOC Kenya, BK Group, EAPC, and Satrix MSCI ETF, which fell by 3.6%, 2.0%, 1.8%, and 0.3%, respectively.

Macroeconomic environment

Inflation stood at 4.3%, down from 4.4% in January 2026, remaining within the Central Bank of Kenya (CBK) target range of 2.5% – 7.5%. Moderate inflation signaled an expanding economy that encouraged investment, while strengthening investor confidence in the market.

During the month, the CBK Monetary Policy Committee (MPC) lowered the Central Bank Rate (CBR) by 25 bps to 8.75% from 9.00%, translating to a cumulative 425 bps cut since August 2024.

Non-core inflation eased to 10.1 percent from 10.3 percent, largely due to falling energy costs. The trends indicate sustained price stability, supported by moderated food and fuel prices amid global uncertainties.

The money market remained liquid, with commercial banks holding excess reserves averaging Ksh52.3 billion above the 3.25 percent Cash Reserve Ratio requirement.

This signals that the banking system remains well-capitalized, liquidity constraints are not binding and interbank funding stress is absent.

Liquidity stability plays a central role in FX market confidence. When domestic liquidity is adequate, banks are less likely to aggressively source foreign currency to cover short-term imbalances.

The Kenya Shilling Overnight Interbank Average Rate (KESONIA) stayed stable at 8.77 percent, though interbank transaction volumes saw slight declines during the week ending February 26.

KESONIA reflects overnight borrowing costs between banks and serves as a barometer of short-term liquidity conditions. A stable KESONIA implies: Balanced liquidity supply and demand, Predictable funding costs and Effective monetary policy transmission.

In prior stress periods, interbank rates often spiked, signaling funding tightness. The current steady rate suggests that the central bank’s liquidity management framework is functioning efficiently.

Treasury bills dominated attention, with the February 26 auction attracting bids totalling Ksh58.5 billion against an advertised Ksh24 billion, a 243.9 percent oversubscription. This level of demand indicates : Strong domestic liquidity, High investor appetite for government securities and Confidence in Kenya’s sovereign credit profile at the domestic level.

When investors prefer holding shilling-denominated government securities rather than converting into foreign currency, it reduces pressure on the exchange rate. Oversubscription also suggests that investors view current yields as attractive relative to inflation and alternative investments.

Strong domestic demand for government debt helps the central bank maintain exchange rate stability without aggressive market intervention.

Yields on 91-day bills fell to 7.580 percent, while 364-day bills dropped to 8.789 percent, reflecting expectations of continued accommodative monetary conditions following a recent CBR reduction. The 182-day paper saw a marginal uptick.

Shilling steady

The Kenyan shilling has found a robust footing, trading with striking stability as investor confidence rebounds on the back of resilient macroeconomic indicators. The shilling maintained its value at Ksh129.02 per US dollar, holding steady against major currencies, including the sterling pound and euro.

The foundation of this newfound stability is largely attributed to a confluence of prudent fiscal management and aggressive monetary policy by the Central Bank of Kenya. High-yield infrastructure bonds and a decisive restructuring of external debt, notably the heavily oversubscribed Eurobond issuance, effectively eliminated the immediate risk of a sovereign default. This masterstroke catalyzed a resurgence in foreign investor sentiment.

Furthermore, Kenya has witnessed an unprecedented influx of foreign exchange, driven by the unwavering commitment of its citizens abroad. Diaspora remittances have surged significantly, forming a formidable defense line for the current account. These inflows, coupled with robust export performances in tea, coffee, and horticulture, have fundamentally realigned the supply and demand dynamics within the interbank forex market.

Foreign exchange reserves stood at Ksh1.617 trillion, equivalent to 5.4 months of import cover, comfortably above the statutory minimum of four months. This provides a buffer against external shocks and underpins currency stability.

For the everyday Kenyan and multinational corporations alike, this stabilization is not merely a statistical triumph but a lifeline. A steady shilling dictates the cost of imported fuel, dictates the pricing of basic household commodities, and determines the actual weight of the national debt burden. As global markets grapple with shifting geopolitical tides, Kenya's economic posture provides a critical anchor for East Africa's financial ecosystem.

March Outlook

Looking ahead to March, the bourse is expected to maintain its bullish momentum supported by the continued impact of the interest rate cuts on the macroeconomic front. The Ziidi Trader platform is also expected to further increase retail investor participation and trading volumes. The expected listing of the Kenya Pipeline Company (KPC) could increase market activity. The banking sector may remain in focus as lenders are expected to announce their FY2025 results, potentially influencing overall market direction.

While domestic conditions appear stable, global risks persist. Key external factors include U.S. Federal Reserve policy trajectory, Commodity price fluctuations, Geopolitical tensions and Global trade policy shifts. Kenya, as a net importer of fuel and capital goods, remains sensitive to global price shocks. However, stable foreign exchange reserves and disciplined domestic liquidity management provide a buffer against external volatility.