STOCK-MARKET OUTLOOK

Last week

Share prices fell last week after profit taking ensued as funds went back to the United States on investors’ optimism over the inauguration of US President Joseph r. Biden Jr.

The benchmark Philippine Stock exchange index (Psei) declined 192.63 points to end the week at 7,045.83 points.

The main index was down all week long as investors pondered on the availability of the vaccine against Covid-19 amid reports that the new Covid-19 strain is more contagious.

Value of trade was high at an average of P11.67 billion as investors decided to sell, while foreign investors were net sellers at P4.82 billion.

all other subindices ended lower—the Mining and Oil index was the hardest hit, declining by 6 percent or 626.71 points to close at 9,321.95 points.

The broader all Shares index fell 100.79 to 4,241.69, the Financials index declined 46.33 to 1,449.12, the Industrial index lost 303.91 to 9,175.10, the holding Firms index shed 146.20 to 7,225.15, the Property index was down 126.71 to 3,568.11 and the Services index retreated 22.43 to 1,536.13.

For the week losers edged gainers 175 to 67 and 17 shares were unchanged.

Top gainers were Vulcan Industrial and Mining Corp., altus Property Ventures Inc., abacore Capital holdings Inc., Pacifica holdings Inc., abra Mining and Industrial Corp. and Chemical Industries of the Philippines Inc.

Top losers were TKC Metals Corp., Island Information and Technology Inc., Metro alliance holdings and equities Corp. a and B shares, Transpacific Broadband Group International Inc., Millennium Global holdings Inc. and Oriental Peninsula resources Group Inc.

this week

Share prices are expected to further decline this week as some investors are getting worried over the sharp rise in inflation, which started accelerating in November.

“Our past notes have consistently harped about the sharp rise in consumer prices in the weeks since November, the post-typhoon season. While these are mostly supply-side driven, these collectively present a twofold concern for financial markets,” broker 2Tradeasia said.

“First, policy makers have to be aggressive in their moves in the first half [of 2021] to stave off any stagflation concerns and second, discretionary consumer items may face greater headwinds, in lieu of much accelerating cost of living relative to wage growth,” it said.

This week, the US Federal reserve is scheduled to meet for its policy meeting, while the Philippines will report its full year GDP for 2020.

“While a full year contraction is already seen to be priced in, investors are expected to look towards the fourth quarter 2020 figures to see if there will be a significant improvement compared to the preceding quarter,” Japhet Louis O. Tantiangco, senior research analyst at Philstocks Financials Inc., said.

he said the main index may test its 50-day exponential moving average, which is currently at 7,005.71 points.

“If it falls below that line, the market’s next support is seen at 6,900. resistance, on the other hand, is seen at the 7,150 - 7,200 range,” he said.

stock picks

Broker regina Capital Development Corp. advised to trade the range on the stock of Merrymart Consumer Corp. as its 2-day downturn last week was arrested after it managed to climb by almost a percent towards P7.30 per share.

“There is still some leftover bullishness from when the stock welcomed the year with a strong one-day gain of 29.29 percent. however, the momentum has begun showing signs of tapering. The stock will likely continue consolidating sideways until P8.12 at least for this week,” it said.

Merrymart shares closed at P7.43 apiece on Friday.

Meanwhile, the broker advised to cut loss on the stock of Basic energy Corp. (BSC), which fell last week and tracked the downside trend with almost all mining stocks.

“It is now on its losing streak and is on the way to fully correcting its initial rally this year. Despite the massive selldown, BSC is still far from being oversold. Indicators are showing a spike in selling momentum as volatility continues to increase,” it said, adding that P1 is the most reliable support for the stock.

“all things considered, the stock still looks a bit too unstable. Wait for the support to hold before positioning.”

Basic energy shares closed last week at P1.28 apiece.