Bargain hunting may lift market this week
AN upbeat outlook is seen for the local market as it trades around its support level of 5,700.
Last week, the bellwether Philippine Stock Exchange Index (PSEi) saw a last minute rebound to close marginally up by 0.21 percent or 12.23 points to its intraday high of 5,785.09 on Friday.
Philstocks Financial Inc. research analyst Claire Alviar said investors might begin to hunt at this level to lift the bourse up to the 6,000 to 6,100 resistance lines.
She added unemployment and inflation data released recently came out ‘better-than-expected,” which indicates an improvement in the economy. “For me, it’s better to accumulate at this level, particularly that investors are looking into the recovery. So far, there’s no risk yet of stricter lockdown measures so uncertainties on it would be lessened,” Alviar said.
However, Alviar also noted there is still no major catalyst that could push the bourse higher and break its resistance levels.
Lack of strong leads and continued net foreign selling could also weaken trading this week, Alviar said.
The market has seen 13 straight days of selling, amounting to P10.57 billion.
On a positive note, Alviar said investors could still be looking into economic recovery and the developments on the vaccine for the coronavirus disease 2019 (Covid-19).
For her part, Regina Capital Development Corp. Managing Director Luis Limlingan said the market has been testing the 5,700 support and would continue to do so depending on the next set of regional economic data, the daily number of reported Covid- 19 cases in the country, and any sudden macro external market shocks.
The research of AAA Equities, on the other hand, sees the market continuing slightly lower in the beginning of the week as general sentiment remains cautious amid the country’s slow economic recovery.
It added that the best- case scenario is the bourse recovering toward the end of the week and ending with gains.
“After three weeks of consecutive losses, the main index is due for a technical bounce. A recovery from the 5,690 this coming week would create a double bottom pattern on the daily chart. A double bottom pattern is a bullish signal that describes change in trend and a momentum reversal from prior leading price action,” AAA Equities explained.
AAA Equities continued that the lack of confidence spurs from struggling consumer spending.
“Although third quarter earnings will show a recovery from second quarter levels, expectations have been lowered due to limited mobility and the uncertain financial situation of individuals. The government has constantly highlighted the economy’s strong macroeconomic fundamentals, which will keep us competitive on a global scale. That being said, the government needs to act now and spur growth in the domestic economy. Further easing of lockdown restrictions and the implementation of health protocols for increased mobility will help speed up the economic recovery,” the research further said.