The local stock barometer is seen continuing to build a base above the critical 7,500 support level this week as foreign investor appetite is seen to remain sluggish.
Last week, the main-share Philippine Stock Exchange index (PSEi) shed 24.77 points or 0.32 percent to close at 7,647.51 on Friday. The PSEi has declined for the second straight week.
“For [this] week, it looks like the market will have an upward bias. The key level is 7,500. As long as the market respects that level, we should be okay. In fact, the longer it consolidates here, the stronger that level will be,” said Manuel Lisbona, president of PNB Securities.
The continued outflow of foreign funds from the market reflected a still risk-averse stance, Lisbona said.
Last week, while the market was initially buoyed by the Bangko Sentral ng Pilipinas (BSP)’s decision to trim the reserve requirement by 1 percentage point to 18 percent effective June 1, Lisbona said the positive tidings were tempered by the expectations that the BSP would raise rates by 25 basis points on the back of rising inflation.
The PSEi’s immediate resistance is at 7,760, he added.
Jonathan Ravelas, chief strategist at BDO Unibank, said investors remained on the sidelines due to geopolitical uncertainties and rising oil prices.
“The week’s close at 7,647.51 highlights some bargain-hunting near the 7,500 levels,” Ravelas said, adding, however that “risk still lies at the break below the 7,500 levels.”
Ravelas sees immediate resistance level at 8,000 levels.
Christopher Mangun, head of research at Eagle Equities, said there’s strong indication that the index would still trade within the congestion area between 7,500 and 7,830 this week.
“This is because the index refuses to break support at 7,500 and the fact that investors are not trading the blue chips,” Mangun said.
Eagle Securities is convinced that any rally in this market will be led by the property sector.
Meanwhile, Mangun said the weak peso had also been a big concern for investors.
“If we see a pickup in volume, the index may break above resistance and try for the next one at 8,000,” Mangun said.
“A break of 8,000 will confirm a trend reversal which will bring investors back into this market,” he added.