Cautious trading seen this week

Local stocks may trade with a bit of caution this week following a sharp pullback in Wall Street on Friday and as investors reassess recent gains that have brought the main index closer to record highs, dealers said.

Last week, the main-share Philippine Stock Exchange index gained 62.64 points, or 1.17 percent, to finish at 5,432.36. Since the start of the year, PSEi has gained 24 percent, or 1,060.4 points.

Joseph Roxas, president of Eagle Equities Inc., said the market might go back to range-trading this week. Historically, he said October was the month of stock market crashes, although none of that was seen happening in the remainder of the month. But Roxas added that any pullback was an opportunity to buy.

This week, among the local developments to watch are the listing of Coal Asia Holdings on Tuesday and the Bangko Sentral ng Pilipinas’ policy rate-setting on Thursday.

Freya May Natividad, an analyst at 2TradeAsia.com, said momentum might soften a bit on account of shortened trading weeks toward All Saints’ Day. “Some might be prodded to go on short-term trading mode while cashing in on intraday ascents as the PSEi retests the 5,450 zone. Seize this lull to buy stocks for 2013,” she said.

Immediate support was seen at 5,400 and resistance at 5,470-5,480.

On overseas developments, Natividad said expectation from the US Federal Reserve Open Market Committee (FOMC) meeting on Tuesday might be dwarfed by preparations and debates with the US elections on November 6. “So far, views are tilted toward the retention of monetary policies, with possible emphasis on details over the treasury bureau’s planned bond purchases, as part of their third quantitative easing scheme (QE3). Overall, this might be quickly factored in as attention is swayed to Europe,” she said.

Natividad said worries over Spain’s required rescue package might still concern investors until Finance officials arrive at an accord based on acceptable terms.—Doris C. Dumlao