Stocks seen to consolidate

The local stock market is seen to enter a consolidation phase this week after being battered by foreign selling in the last seven weeks.

Last week, the main-share Philippine Stock Exchange index (PSEi) lost 93.87 points or 1.22 percent to close at 7,629.73.

Since Aug. 15, AB Capital Securities estimated that some P24.5 billion in net foreign money had gone out of the market.

In terms of technicals, AB Capital said the relative strength index showed an improving market, although there was still indication that “selling pressure continues to weigh on the index.”

“Depending on how the next major events pan out and whether the level of political noise were to increase, the market can follow two channels: A sharp downtrend channel toward the 7,197 and then the 6,948 level, or a slow uptrend channel with quick ups and downs back to the 7,836 and then the 8,000 level,” the brokerage house said.

The next major events to watch, AB Capital said, would be the US elections and the meetings of the US Federal Reserve in December, the European Central Bank, the Bank of England and the Bank of Japan.

“It is important to note that the 7,529 level is a strong support that the market has retested twice now,” it said.

This week, AB Capital said the economic data to await would be US September manufacturing and key employment data as well as US crude oil inventories.

Luis Gerardo Limlingan, managing director at Regina Capital Development, said the PSEi might trade sideways this week, with slight a bias on the upside.