Market seen retesting 6,000 resistance level
After firming up in the last four weeks, the local stock barometer is seen to trade with a bit more upside this week, possibly retesting the 6,000 resistance, which the market failed to break last week.
“Looking at the past month, the market has moved steadily up from the panic-selling that pushed the market down to 4,039. This tells me that there is underlying strength and optimism that is propping up the market steadily despite net foreign selling by investors,” said Manuel Lisbona, president of PNB Securities.
Last week, net foreign selling accelerated to some P6.2 billion compared to P2.6 billion in the previous week. However, domestic investors kept the market afloat.
The Philippine Stock Exchange index gained 5.07 percent last week to close on Friday at 5,789.97.
The PSEi’s next resistance level will still be 6,000, Lisbona said.
“We are definitely not out of the woods yet, as corporate quarterly results have yet to reflect the full impact of ECQ (enhanced community quarantine) on bottom lines. Chartwise, we are looking at 5,400 as immediate support for the market,” Lisbona said.
BDO Unibank chief strategist Jonathan Ravelas said last week’s 5-percent gain was partly buoyed by the Bangko Sentral ng Pilipinas’ (BSP) additional measures to support the economy, further easing its policy rates which favored the capital markets.
The BSP delivered last week a fresh 50-basis point (bp) off-cycle interest rate cut to a record-low of 2.75 percent, bringing the total rate cuts since the start of the year to 125 bps. Economists said more “liquidity bazooka” was likely to be unleashed in the coming months to counter economic shockwaves from the COVID-19 (new coronavirus disease) pandemic.—Doris Dumlao-Abadilla INQ
