STOCK-MARKET OUTLOOK

Last week

Share prices slid last week with the main index falling to 6,700-point level, as investors cashed in on their gains after the Bangko Sentral ng Pilipinas (BSP) indicated that it may start raising rates soon due to rising inflation.

The benchmark Philippine Stock exchange index shed 267.34 points to close at 6,731.25 points.

The main index started the week strong, but prices fell as the week progressed, with Friday seeing the biggest decline at 178.20 points or 2.6 percent.

analysts said risk-off sentiment took over as investors turned cautious on news that the central bank may raise its rates earlier than June as prices of basic commodities continued to soar mainly because of the war in Ukraine.

Daily average trading for the week was still low at P5.11 billion. Foreign investors were net sellers at P1.46 billion.

all other sub-indices ended in the red, led by the broader all Shares index that fell 116.46 points to close at 3,605.14 points, the Financials index lost 77.52 to 1,607.85, the Industrial index dropped 243.69 to 9,181.43, the holding Firms index shed 216.63 to 6,341.57, the Property index declined 156.93 to 3,056.13, the Services index was down 74.97 to 1,882.12 and the Mining and Oil index plunged 1,134.99 to 11,524.76.

For the week, losers edged gainers 167 to 56 and 28 shares were unchanged.

Top gainers for the week were Mabuhay holdings Corp., Citystate Savings Bank Inc., easycall Communications Philippines Inc., Primex Corp., Manila Broadcasting Co. and Oriental Petroleum and Minerals Corp. B shares.

Top losers were roxas and Co. Inc., atlas Consolidated Mining and Development Corp., Ferronoux holdings Inc., Vitarich Corp., Philippine Bank of Communications and ipeople, Inc.

this week

Share prices may continue to fall this week as the upcoming meeting of the United States Federal reserve on May 3 and 4 will be the focus of most investors.

Broker 2Tradeasia said the possible 50-basis point rate hike has likely been priced in by the investors, but the BSP may have to catch up in some way.

The policy-making Monetary Board will meet on May 19.

The government will also announce the april inflation rate this week and the country’s GDP next week.

The release of reports on first quarter earnings will continue this week. Seven large firms will announce their performance.

“For next week the market may still move with a downward bias as it contends with a lot of headwinds both onshore and offshore. Onshore, concerns over rising inflation and consequently, the possibility of an earlier rate hike by the BSP may continue to weigh on sentiment. adding to these is the resurfacing worries over a possible resurgence of Covid-19 cases here in the Philippines,” Japhet Louis O. Tantiangco, senior research analyst at Philstocks Financials Inc., said.

“Offshore, the weakening of China’s economy amid their Covid-19 situation, the possibility of a further escalation of the russia-ukraine war, and their implications on the local economy may also dampen sentiment.”

Support price for the main index is now seen at 6,600 points while resistance is seen at the 7,000 to 7,100-point range.

stock picks

Broker regina Capital Development Corp. advised to sell on rallies on the stock of Manila electric Co. (Mer) after the stock has been bucking the index downward trend the past few days. It managed to post a four-session winning streak with technical readings still tipping the scale towards sell signs, the broker said.

“all things considered, we expect Mer to be able to sustain this uptrend, at least until it challenges once again its resistance at P364. Nonetheless, those who were able to pick some up at the bottom last week should start top-slicing, since Mer’s average share price volatility is starting to pick up as well.”

Meralco’s shares closed last week at P352.40 apiece.

Meanwhile, it advised to take profits on the stock of emperador Inc. as its rally is starting to lose steam.

“Indicators, while all still on buy signs, are starting to show weaker buying pressure and momentum. at this point, investors should consider taking profits. EMP is already trading precariously above all its major moving averages. a correction or a pullback before hitting the P20 resistance is very much warranted.”

emperador shares were last traded at P19.50 apiece.