THE BENCHMARK Philippine Stock Exchange index (PSEi) is likely to trade within a tight range this week following a wave of profit-taking in the last few trading sessions.
The PSEi last week sank 2.2 percent to 7,946.89 on “overvaluation” concerns after the measure breached the 8,100 level earlier this month. BPI Asset Management said foreign investors were net sellers to the tune of P5.57 billion last week.
“We expect the local equities market to trade range-bound from 7,780 to 8,000. Continued net foreign outflows as seen [last] week will drag the index down,” BPI said in an outlook report.
“Inflation data from the US, which is expected to come out [this] week, could influence the direction of the market. Low inflation would result to positive sentiment in the equities market as it could indicate a delayed normalization of Fed rates,” it added.
Stockbrokerage firm I.B. Gimenez Securities said in a separate report that investors would also be taking their cue from first-quarter 2015 results that were due in the coming weeks.
It added that last week’s consolidation was expected, given the strong performance of the PSEi, adding that almost all index companies reported
“better-than-expected” earnings results for 2014.
“Investors will start to look forward to the continuation of the previous earnings, with the 1Q 2015 report releases to start as early as [this] week,” I.B. Gimenez said.
It said good economic fundamentals and benign inflation should help prop up the index back to the 8,000 level but it advised investors to be more selective. I.B. Gimenez said it continued to favor power and consumer stocks “as these would benefit from strong domestic consumption.” Miguel R. Camus