Market seen moving sideways within tight band

Local stocks are seen trading in a narrow range this week as investors await fresh market catalysts.

Last week, the main-share Philippine Stock Exchange index (PSEi) gained 182.87 points or 3.2 percent to close on Friday at 5,967.96 as investors welcomed news about the slowing coronavirus rate of infection and further reopening of the local economy.

This week, the PSEi may move sideways within a tight band between 5,700 and 6,100, said Ron Acoba, chief investment strategist at research provider, Trading Edge Consultancy.“For the last three to four weeks, the market’s rally attempts have been capped by its 50-day moving average. Presently, the index is trading right below the said average, giving it a little downside tilt in the very short run,” Acoba said.

BDO chief strategist Jonathan Ravelas said last week’s gains were due to optimism on further reopening of the economy as economic managers announced a shift from total avoidance to managing the coronavirus risks. “The week’s close at 5,967.96 highlights the market is in a consolidation,” Ravelas said.

“We will continue to see the market to range between the 5,700 to 6,000 levels in the near-term.”

Last week, the PSEi tested the 6,000 mark, hitting an intra-week high of 6,034.03, but succumbed to profit-taking thereafter.

Meanwhile, foreign investors’ appetite on local equities remains sluggish. Last week, there was net foreign selling of P2.14 billion, although this slowed from the P4 billion in outflows in the previous week.

Net foreign selling so far this year has amounted to P94.12 billion.

Since the start of the year, the PSEi has declined by 23.64 percent. The most battered so far this this have been the financial and property indices, which have declined by 38 percent and 34 percent, tracking the economic recession seen this year. INQ