THE LOCAL stock market is seen to remain in the doldrums for the sixth straight week this week ahead of the upcoming US Federal Reserve meeting.
Last week, the main-share Philippine Stock Exchange index (PSEi) shed 225.63 points or 2.89 percent to close at 7,581.79 as foreign funds trim their exposure to local equities mostly due to valuation concerns, coupled with emerging political jitters as well as uncertainties on US interest rates.
The market will resume trading today as yesterday was a nonworking holiday in observance of Eid’l Adha (Islamic Feast of Sacrifice).
Joseph Roxas, president of local stockbrokerage Eagle Equities, said US Fed jitters would continue to impact on investors’ appetite this week.
Luis Gerardo Limlingan, managing director at Regina Capital Development, said the 130-day moving average at 7,750 would play a very crucial role this week as this support level could dictate the PSEi’s movements, potentially for the rest of the month.
“However, we should expect more corrective pressure rather than a recovery as both trend direction and technical momentum favors the bears,” Limlingan said. “As such, we highly recommend keeping positions light while selling into recovery for issues trading in a strong downtrend. Price stability is a must because a successful support test won’t be enough to sponsor recovery—a solid consolidation, followed by technical reversals from indicators will greatly increase rally chances.”
Limlingan said the 100-day moving average at 7,660 would be a key resistance to breach as this would be the first indication that the index would enter a trend reversal. Based on a Fibonacci retracement plotted since May, he said the PSEi might fall to as low as 7,400 if the 130-day moving average of 7,750 were breached downwards.
AB Capital Securities said foreign investors seemed to be moving their money from the expensive Philippine market to other cheaper markets such as India and Indonesia. Doris Dumlao-Abadilla