Index may touch 7,700 mark

MANILA, Philippines–The Philippine Stock Exchange index (PSEi) may explore the 7,700 level this week as upbeat macroeconomic expectations continue to boost risk appetite, analysts said.

Last Friday, the index rose by 1.9 percent, to close the month at an all-time high of 7,689.91.

“Our weekly buy recommendation holds as the general trend of the index is strong, despite being overextended,” said Luis Gerardo Limlingan of local stock brokerage Regina Capital Development Corp.

“Pullbacks this week are expected, but we see this as a buying opportunity because the index will now be able to form a higher low base around 20-day moving average (7,440.00).”

Based on current volatility readings, it is possible for the index to reach the 7,790 target this week, but seeing the lack of pullbacks (bear scenario), this may not be sustained and can lead to sharp corrections, he added.

According to AB Capital Securities, even as the index is now approaching its 7,700 technical target, sentiment remains bullish after the country posted higher than expected fourth quarter and full year results.

The Philippine economy grew by 6.9 percent in the fourth quarter of 2014, bringing the average full-year growth to 6.1 percent.

AB Capital said investors would be positioning ahead of the January inflation results to be released on Feb. 5. The Bangko Sentral ng Pilipinas expects inflation to have eased further to 1.8 to 2.7 percent in January on lower cost of food and oil prices. Doris C. Dumlao