Profit-taking seen
The local stock market is seen susceptible to some profit-taking this week before the local barometer retests its next target of 6,500.
The main-share Philippine Stock Exchange index last week gained 1.85 percent to close on Friday at 6,424.99.
AB Capital Securities analyst Abbygayle Estrella said that on a technical perspective, the PSEi had been enjoying a strong rally that kept its movement in the upper band of its uptrend. For the past days, she said the momentum has been fueled by local corporate earnings and gradual lifts from foreign developments.
But given its sudden surge to the 6,400 level, AB Capital Securities is expecting a minor pullback as some technical indicators were already at overbought levels. “However, we think this will provide opportunity for investors to reenter the rally as we see the main index climbing toward 6,500,” she said.
“Momentum is there but there might be strong resistance near 6,500,” said Lito Biacora, chief investment officer at Bank of the Philippine Islands.
Banco de Oro Unibank chief strategist Jonathan Ravelas said that chartwise, last week’s closing above 6,400 continued to support further tests toward 6,500 in the near term. He said immediate support and resistance levels would be at 6,300 and 6,500, respectively.
Estrella said that among the indicators to watch this first trading week of March would be the final manufacturing indices of China and the United States for the month of February. She said these should dictate the tempo of the global markets.
Giving a glimpse on how the two biggest economies flexed their economic muscle, relevant data scheduled for the week also include China’s indices for its non-manufacturing and services sectors as well as the temperament of the US labor market through the ADP employment report and jobless claims, she said.
Estrella said the market would also await the Philippine inflation report for the month of February following two consecutive months of above 4-percent rates, which is seen boosting the Bangko Sentral ng Pilipinas’ assertion of narrowing room for low key rates.
“The PSEi is trading above its moving averages, which reinvigorates its uptrend for the near term. The net foreign buying for the month of February also reinforces the buying momentum,” Estrella said.
“The local earnings season is not yet over and potential upside will come from earnings surprises. We advise investors to buy on pullbacks, which should provide higher upsides. Despite the pullback, we expect the main index to stay in the upper band of the uptrend as indicators remain favorable for the PSEi’s ascent,” Estrella said. Doris C. Dumlao
