Market correction seen to continue this week

Stock market investors are seen pocketing gains this week after an eight-day winning streak but any dip is seen as an opportunity for others to reenter the market amid upbeat prospects for equities for the rest of the year.

Last week, the main-share Philippine Stock Exchange index (PSEi) advanced by a total of 211.58 points or 2.5 percent to close on Friday at a new record finish of 8,770. A new intra-day peak of 8,858.07 was also touched on Friday.

The PSEi had closed at record highs in the last five straight session, buoyed by rosy prospects for the Philippines this year alongside upbeat economic data out of US and China.

“We go into [this] week with a lot of positive momentum after hitting new highs [last] week. We saw a bit of a correction on Friday which may continue [this] week. There is nothing to worry about as this is a healthy correction after being up so much in the last few weeks,” said Christopher Mangun, research analyst at local stock brokerage Eagle Equities Inc.

“We saw a lot of foreign buying last week which may continue in the weeks to come as institutions usually position themselves in the beginning of the year after getting out and taking profits at the end of last year. With the effects of the [TRAIN] and the Build, build, build program of the government, we are going to see more money flow into the market which may push it above 9,000 much earlier than expected,” he added.

Mangun said the PSEi’s support levels would be at 8,600 and 8,540 while next resistance levels would be at 8,700 and 8,770.

BDO chief strategist Jonathan Ravelas noted that the market had cheered the passage of the Tax Reform on Acceleration and Inclusion (TRAIN), as this was a structural reform that would boost the country’s infrastructure and overall economy.

However, he noted that some profit-taking had taken place after the PSEi printed a new all-time high of 8,858.07 toward the end of the trading week.

“Chartwise, the week’s close of 8,770 highlights that the market still has some gas to try the 9,000 to 9,100 levels,” Ravelas said.

Ravelas sees immediate support at 8,300 and resistance at 9,100 levels.