Stock market bulls and bears are looking toward the next critical resistance near the 7,000 barrier after the benchmark Philippine Stock Exchange index (PSEi) gained for a fifth straight week.
Over the last five sessions, the PSEi added 2.45 percent to end Friday at 6,863.86, despite being in the midst of the so-called Ghost month that is typically associated with sideways movements.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said in his latest outlook report the next “important resistance” areas to watch were between 6,980 and 7,000.
Meanwhile, immediate support was seen from 6,600 to 6,500 with major support pegged at 6,400 to 6,370.
Ricafort said the rally was supported by “generally better corporate earnings results that fundamentally support higher valuations, as the economy further reopened toward greater normalcy in recent months.”
Policy rate hike
This comes as the Bangko Sentral ng Pilipinas raised the key policy rate by 50 basis points last week while warning that high inflation would persist until the first half of 2023.
Jonathan Ravelas, a financial strategy consultant at e-Methods for Business Management Corp., expected “sideways to up action” approaching resistance at 6,950.
“With inflation and interest rates yet to peak, market remains vulnerable to sell-offs,” he added.
Gains in recent weeks have cut year-to-date losses at the PSEi to 3.63 percent.
First Metro Investment Corp. and the University of Asia and the Pacific said in the latest issue of The Market Call it was possible for the PSEi to trade up to 7,100 after “better-than-expected corporate earnings” in the second quarter of the year.