Stock bulls cling to 7,000 in test of might
The benchmark Philippine Stock Exchange index (PSEi) might continue to consolidate at the 7,000 level as stocks extended gains the previous week after entering a bull market last Jan. 13.
The PSEi gained 1.51 percent last week as it closed Friday at 7,056.62 while the broader All Shares index added 1.24 percent to 3,682.86.
“Going into the next week, we expect the index to trade sideways, continuing to test the 7,000 key resistance levels,” Gabryle Aguila, head of equity research at stock brokerage house Unicapital Securities Inc., said in a note to investors.
Aguila said sentiments were lifted by expectations the influential US Federal Reserve would be less aggressive in hiking interest rates this year while the Philippine government painted a rosy picture for the economy.
Foreign buying also returned to the market, with net overseas purchases of P4.5 billion the past week.
Jonathan Ravelas, financial strategy consultant at e-Methods for Business Management Corp., said 7,000 remained a key battleground for PSEi unless the bulls could flip it into a strong support zone.
Article continues after this advertisement“The bulls are struggling to stay above the 7,000 levels. If sustained, it could fuel a challenge [toward the] 7,300 [or] 7500 levels,” Ravelas said of an area he dubbed the “COVID ceiling.”
Article continues after this advertisement“However, failure to sustain itself above the 7,000 levels could prompt further profit-taking and bring back the index to the 6,300/6,500 levels anew,” he added.
Some investors might also take positions ahead of the next rebalancing of the 30-member PSEi in February.
The Aboitiz family’s Union Bank of the Philippines and Consunji-led DMCI Holdings Inc. were two companies with “high probability” of being included in the PSEi, according to stock brokerage house First Metro Securities. INQ
