Investing in the Kenyan stock market has become more accessible in recent years. Digital platforms such as Ziidi Trader have made it easier for ordinary Kenyans to buy and sell shares, reducing some of the traditional barriers like paperwork and account processes.

Today, more Kenyans can participate in the Nairobi Securities Exchange (NSE) and potentially benefit from two main sources of return:

• Capital gains: buying a share at one price and selling it later at a higher price
• Dividends: cash paid out by companies to shareholders from profits

Because capital gains depend on rising share prices, many Kenyans will naturally ask: How can I tell when a share price is likely to go up?

There is no guaranteed formula. However, there are certain signs that often support upward price movement, especially when combined with sensible valuation and long-term thinking.

Below are five important indicators, along with what you should watch out for.

Also Read: Safaricom Launches Ziidi Trader: How to Buy NSE Shares on M-Pesa App

1. Consistent Profit Growth

When a company reports improving earnings and steady profit growth, its share price often responds positively. Over the long term, share prices tend to follow earnings.

If profits are rising consistently over several years, not just one quarter, it signals that the business model is working.

However, there are two important nuances:

• Expectations matter. If the market expects profits to grow by 20% and the company reports 10%, the price may fall even though profits increased.
• Share Price. A good company can still be a bad investment if the share price is already too high.
  

Before buying, ask:

• Has the company grown earnings consistently for 5–10 years?
• Is its debt manageable?
• Are profits coming from core operations or one-off asset sales?

Strong results are important, but they must be supported by a reasonable valuation.

Also Read: How to Buy Kenya Pipeline (KPC) IPO Shares (Step by Step Guide)

2. Dividend Announcements and Growth

Dividend payouts signal that a company is generating real cash. Dividend-paying stocks often attract pension funds and income-focused investors, which can increase demand and raise the stock price. 

On the NSE, certain companies have built a reputation as consistent dividend payers. For example, banks like Standard Chartered Bank Kenya and Equity Group Holdings, as well as British American Tobacco (BAT) Kenya, have historically been regarded as strong income stocks.

These companies have often attracted investors seeking steady cash returns through dividends. However, investors should remember that:

• A high dividend today does not guarantee a high dividend tomorrow.
• Dividend sustainability depends on profits and cash flow.
• A very high yield may sometimes signal limited growth opportunities.

The trick is not just chasing the highest dividend, but investing in companies that can sustain payouts in the long term. 

Also Read: Most Profitable NSE Stocks by Dividend Payments

3. Positive news and market changes

Good corporate news can trigger price movement. It could be a strategic partnership, regulatory approval, major contract wins, or a favourable shift in industry outlook.

For instance, reports on the expected acquisition of NCBA Group by Standard Bank (October 2025) saw the share price rise from Ksh69.50 to Ksh96.25 within five days. 

However, investors should understand:

• Markets often move on expectations and rumors before official announcements.
• Not all proposed transactions are completed.
• Regulatory approvals in Kenya can affect timelines and outcomes.

In the case of the NCBA merger with Standard Bank, the deal did not materialise over disagreement on staff retention and the future of the NCBA brand. NCBA later disclosed that it was in advanced talks to be acquired by NedBank, which has kept the share momentum. 

Other news that can affect the performance of shares includes changes in top management, such as the appointment of a CEO and the sale of assets.

4. Increased Trading Volume

This refers to the number of shares being bought and sold. When volume rises together with price, it can confirm growing investor interest.

However, investors must understand the structure of the NSE:

• A few institutional trades can significantly move prices.
• Volume spikes may reflect block trades rather than widespread confidence.

Volume is useful as a confirmation signal, but it does not determine a company’s actual value.

5. Buying by Major Shareholders

When significant shareholders increase their holdings, it can signal confidence in the company’s future.

However, this should never be the only reason to invest. Insider activity must align with strong fundamentals and reasonable valuation.

Also Read: How to Start Investing in the Kenyan Stock Market: A Beginner's Guide

Before You Buy: Make Sure You Are Not Overpaying

While these five signals can support rising prices, there are broader factors that every Kenyan investor should consider.

Even the best company can give you poor returns if you pay too much for its shares.

Like with any other asset, say a car or a piece of land, if you buy it at a higher cost than its actual value, the resale profit automatically reduces. 

Here are three elements of a listed company that should guide your valuation: 

1. Price-to-Earnings (P/E) Ratio 

This tells you how expensive a share is compared to the company’s yearly profit.

For example:

If a company earns Ksh10 per share each year and the share price is Ksh100. You are paying 10 times its yearly profit. That means the P/E ratio is 10.

In simple terms, you are paying 10 years’ worth of profits upfront. 

Now imagine another company:

It earns Ksh10 per share, but its share price is Ksh 300

You are paying 30 years’ worth of profits. That is much more expensive.

As a general rule:

• A lower P/E often means the stock is cheaper.
• A very high P/E means investors expect strong future growth.
  

2. Price-to-Book Ratio

Every company owns assets: land, buildings, technology, equipment, cash, and inventory. If you subtract its debts, you get what is called its “book value.”

Price-to-book compares: 

Share price vs the company’s net assets.

If price-to-book is 1: you are buying the company close to what its assets are worth.

If it is 3: You are paying three times the company’s net asset value.

3. Earnings Growth Rate “Is the Company Growing or Just Standing Still?”

This tells you how fast profits are increasing.

If profits were:
Ksh10 per share last year
Ksh12 per share this year

That is 20% growth. Growing profits usually support rising share prices over time.

A Simple Rule for Ordinary Investors

Before buying a stock, ask:

1. Is the company consistently making profits?
2. Are profits growing over several years?
3. Am I paying a reasonable price for those profits?

If a stock is popular and everyone is talking about it, but:

• Profits are not growing
• Debt is rising
• The price looks very high compared to earnings

You may be overpaying.

Where Can You Get This Information?

All listed companies are required by law to publicly list their financial results. Many of these release an annual report, a half-year report and quarterly reports. The reports are publicly available on most company websites, on the NSE website, and most brokers will share the reports with their clients.

Other Important Factors to Consider

• Interest rates and inflation affect stock prices.
• The Kenyan shilling’s movement affects companies with foreign debt and those that handle imports and exports.
• Some NSE shares are not very liquid; selling or buying quickly may be difficult. 
• Diversifying across several companies and sectors of the economy reduces risk.

Wrapping Up

No single indicator guarantees that a share price will go up. Stock markets are influenced by a mix of company performance, investor sentiment, macroeconomic forces, and technical factors. 

But by combining these signals, strong earnings, rising dividends, increased trading volumes, good news flow, and sector momentum, you can improve your chances of identifying quality shares with long-term growth potential.

The goal should not be to perfectly time the market, but to steadily build wealth by owning solid businesses at discounted prices.