THE LOCAL stock barometer is widely seen to retest 8,000 this week but valuation jitters and a large initial public offering (IPO) are seen making the index vulnerable to pullbacks.
Last week, the main-share Philippine Stock Exchange index (PSEi) gained 200.63 points or 2.63 percent to close on Friday at 7,830.35 as the hangover from Britain’s surprise decision to exit the European Union started to wane.
Momentum in foreign buying continued last week, with foreign accounts recording net transactions worth P1.3 billion, influenced by positive sentiments in the US market amid prospects that the Fed’s interest rate increase would be deferred to next year, stockbrokerage AB Capital Securities said in its weekly outlook.
“In technical terms, the index remains bullish as it continues to hold the newly established support area at the 7,800 level. That said, we believe that our 8,165 bullish technical projection for July remains intact based on the current upward momentum,” the brokerage said.
This week, AB Capital expects the PSEi to range between 7,700 and 8,000 and sees a possible retest of the 8,000 level.
The brokerage said it had mainly a bullish bias on the PSEi “as foreign inflows continue to have confidence in the local bourse, while the uptrend remains intact.”
Jonathan Ravelas, chief strategist at BDO Unibank, said high valuations could limit the market’s rise and prompt some profit-taking following the test of 7,980.75 last week.
“Continue to expect a test toward the 8,000 levels in the near-term; a break below 7,800 levels could prompt a much larger correction toward 7,500,” Ravelas said.
Luis Gerardo Limlingan, managing director at Regina Capital, said the index would likely continue testing the 7,900-8,000 resistance points this week as volatility continues to pick up. Doris Dumlao-Abadilla