The local stock barometer is seen striving to stay above the crucial 8,300 level this week as investors await fresh catalysts and as more fourth quarter local corporate earnings results come in.
Last week, the main-share Philippine Stock Exchange index (PSEi) fell by a total of 86.06 points or 1 percent to close on Friday at 8,372.51, declining for the third straight week.
The week’s close suggested that the market would trade between a range of 8,350 and 8,600 levels, said BDO Unibank chief strategist Jonathan Ravelas. “However, should a break below the 8,350 levels occur, expect a test of 8,000 to 8,100 levels,” he said.
Immediate support is seen at 8,300 while resistance is at the 8,800 levels, Ravelas said, adding that “investors continued to remain on the sidelines as they await further results of the fourth quarter 2017 corporate earnings and fresh leads in the economy.”
“As the market continues to consolidate, there are a couple of scenarios that may play out. It has held our support at 8,330 which may be a pivot level and we may see the market start to recover,” said Christopher Mangun, head of research at Eagle Equities Inc.
“The other scenario is if support is broken at that level; we may lose another 200 points as it tests our next major support at 8,070. The key to the deal is we need to see more volume before we see the market recover,” Mangun said.
Last week’s value turnover of P35.76 billion was still below average, a further proof that investors are still on the sidelines, said Mangun.
As the country’s February inflation came in at 4.5 percent, another three-year high, Mangun added that investors were concerned on the impact on interest rates and the overall market.
What the market is seeing now is a “manageable” correction, said Chrissy Alvarez, head of corporate planning at Rizal Commercial Banking Corp. (RCBC).
“On the long term, there’s a lot of upside still. If we talk about fundamentals, TRAIN (Tax Reform for Acceleration and Inclusion brings upside) and corporates still have stronger earnings growth,” Alvarez said.
Mike Ricafort, head of economics and industry research at RCBC’s corporate planning group, said it was possible for the PSEi to reach 9,300 to 9,500 this year. His group also sees average PSEi corporate earnings growing by 10 percent this year.
To date, the PSEi has given up the hefty gains seen earlier in the year. As of Friday’s close, the index has lost 185.91 points or 2.2 percent so far this year.
On Friday, US stocks rallied on the back of a stronger-than-expected US jobs data. America created 313,000 new jobs in February, beating estimates of 205,000.