Cautious sentiment is seen to prevail in the stock market this week as investors continue to monitor developments from the restless Taal Volcano.
Last week, the main-share Philippine Stock Exchange index (PSEi) lost a total of 99.17 points or 1.28 percent to close Friday at 7,623.41.
It also did not help that the market was weighed down last week by Ayala group-related companies after President Duterte called for scrutiny of Ayala Land’s Technohub lease agreement with the University of the Philippines.
By Thursday, a glimmer of hope came as the country reported a fourth quarter economic growth of 6.4 percent. The PSEi clawed its way back to the 7,600 level.
Friday’s performance, however, looked “tentative” even after a strong opening during the day, PNB Securities president Manuel Lisbona said.
“Sentiment was dampened by the ongoing unstable situation at Taal Volcano and its vicinity given possible negative impact on food prices,” Lisbona said.
As such, Lisbona said the market would likely remain range-bound in the days ahead, with 7,700 as the first resistance.
“Support can be found at 7,500 and at the week’s low of 7,425,” he said.
“Foreign funds continue to be net sellers and until this reverses, we can expect the market to move sideways for the meantime,” he said.
“The week’s close at 7,623.41 highlights some buying support emerged below the 7,500 levels. Continue to see market to range between the 7,500 – 7,700 levels in the near-term. However, a significant break below the 7,500 will reinforce previous view calling for a test of the 7,000 -7,300 levels,” BDO Unibank chief strategist Jonathan Ravelas said.
Valuation-wise, Lisbona said the market was very attractive, with investors willing to pay 17 times the kind of earnings they expect to make this year.
Expectations of a monetary policy easing is also providing support for the market. —DORIS DUMLAO-ABADILLA INQ