Bargain-hunting seen

STOCKS could trade higher this week as bargain hunters step into the picture after the equities market suffered losses for most of the previous week’s trading sessions.

The benchmark Philippine Stock Exchange index (PSEi) fell 2.94 percent week-on-week as of Friday. Losses during the period were offset by Friday’s bounce following six straight sessions of decline.

The poor performance came as investors worried about an interest rate increase by the US Federal Reserve as well as the first-quarter gross domestic product (GDP) in the Philippines, which came in slower than expected on weaker government spending and falling exports.

“Other technical indicators such as the RSI and Stochastics also show that the index is now ripe for a rebound, implying that we might see some form of bargain-hunting [this] week,” stockbrokerage firm AB Capital Securities Inc. said in its outlook report.

It noted, however, the investors should exercise caution amid broader uncertainties.

“Given the bearish macroeconomic sentiments, we may expect continuous negative foreign outflows in the market for the following weeks possibly dragging shares lower,” AB Capital said.

Jonathan Ravelas, chief strategist at BDO Unibank Inc., noted that a rebound was possible, with the PSEi possibly trading higher to 7,800 and 7,850.

For its part, AB Capital pegged the initial support level at 7,500. Miguel R. Camus