Market seen consolidating this week

The Philippine stock market is expected to consolidate within the 7,500 to 7,800 range this week given last week’s performance, traders said.

It will be just a three-day trading week with the market closed on June 12 and June 15 for Independence Day and Eid’l Fitr, respectively.

“The week’s close at 7,740.74 continues to suggest further consolidation between the 7,500 and 7,800 levels. A retest of the 7,500 levels remains a possibility in the near-term. Only a break above the 8,000 levels will suggest a reversal,” said Jonathan Ravelas, chief market strategist at Banco de Oro.

The benchmark Philippine Stock Exchange index rallied by 1.45 percent to settle at 7,740.74 last week.

It’s been quite some time since the index rallied again, spurred by bargain hunting after the government reported a lower than expected inflation of 4.60 percent in May.

Ravelas said this lessens the probability of a policy rate hike by the local central bank, which is scheduled to meet two weeks from now.

“However, profit taking activities took place toward the end of the trading week causing the market to close the week off the highs. It hit a high of 7,814.88 this week,” Ravelas said.

Immediate support and resistance is seen at 7,500 and 8,000 levels, respectively.

Chris Mangun of Eagle Equities said “the market continues to show signs of recovery after bouncing off the 7,500 support line last week. If it can sustain this momentum, we will start to see a reversal to test resistance at 8,000.”

He said volume is likely to be low because of the shortened trading week given the two days of holidays.

“With only three trading days next week due to the holidays, the index will continue in this congestion area between 7,500 and 7,830 on low volume. The following weeks are going to be very crucial as investors will decide to start coming in or to stay on the sidelines and wait for a catalyst,” he said.