Stock trading seen to remain weak this week

Local stocks are seen continuing to trade with caution this week as foreign investor appetite remains sluggish heading into the first-quarter corporate earnings reporting season.

Last week, the main-share Philippine Stock Exchange index (PSEi) slipped by 0.07 point to close on Friday at 7,721.01.

Jonathan Ravelas, chief strategist at BDO Unibank, said the market had been weighed down by concerns over a weak peso and rising inflation, both of which were putting a squeeze on consumer spending.

Last week, the net foreign selling of $158.8 million marked the biggest foreign outflow in four weeks, he noted.

“Chartwise, the week’s close at 7,721.02 highlights near-term support emerged at the 7,500 to 7,550 levels. Expect some pullback toward the 8,000 levels. However, the market is still vulnerable toward the 7,000 to 7,200 levels,” Ravelas said.

BDO sees immediate support and resistance at 7,500 and 8,000 levels, respectively.

In the April issue of publication “The Market Call,” First Metro Investment Corp. (FMIC) said that without much positive news in the short-run—except a transitory boost from first-quarter gross domestic product (GDP) growth announcement by May—the PSEi may trade sideways along its present 7,500 to 7,800 range.

“Besides, a quick recovery may be weighed down by negative economic and political factors (both domestic and external). Bargain-hunting should, thus, be selective and tempered by longer holding periods,” FMIC said.

Christopher Mangun, head of research at Eagle Equities Inc., said last week’s trades proved that 7,700 was a strong support, noting that the index had closed above this level after testing support at 7,500 on Thursday and Friday.

“As we go into the new trading week, I think we will continue to see a weaker market as investors continue to wait on the sidelines for a bottom in the index,” Mangun said.

With only four trading days this week, Mangun expects a lower turnover value which he said may see the PSEi closing the week below 7,700 to test the next support at 7,500.