Sellers looking to dominate stock market this week
Local stocks are seen becoming more vulnerable to profit-taking this week following the strong run-up in the last two weeks.
Last week alone, the main-share Philippine Stock Exchange index gained 121.83 points or 1.82 percent to close at 6,796.34.BDO Unibank chief strategist Jonathan Ravelas said the index had been perked up by prospects of the economy reopening further and the stable inflation rate in May.
“The week’s close at 6,796.34 hints a near-term top could be in place at the week’s high of 6,841.68,” Ravelas said. “Continue to expect the market to range between the 6,500 to 6,850 levels in the near-term.”
Papa Securities said the main index was already showing signs of overheating following the massive gains in recent days.“Technicals signal that the major 7,000 resistance would likely hold in the near term and that the index would likely see another period of consolidation instead,” the brokerage said.
As investors pocket gains, Papa Securities said there would be opportunities to reenter the market closer to the 6,600 support level.
In a research note, HSBC economist Noelan Arbis said inflation was beginning to normalize after months of volatility and above-trend price increases.
The 4.5-percent annual inflation recorded in May, the same rate seen in the last two months, suggested that “much of the concerns regarding runaway inflation in the Philippines are behind us,” Arbis said.
The economist added limited demand-side pressures should keep inflation relatively benign in the months ahead.
“Movement restrictions in Metro Manila and surrounding areas, despite being eased, remain broadly in place. These restrictions are scheduled to remain in place until the end of June for many areas, although risks that the restrictions could be extended linger given still-elevated cases in the country,” he said.
Meanwhile, the slow pace of vaccinations could also delay any significant recovery in domestic demand, Arbis said. Nonetheless, the economist said the Bangko Sentral ng Pilipinas could keep its key interest rates unchanged for the rest of the year.
