Profit-taking expected as PSEi continues climb

PROFIT-TAKING could be in order following last week’s four-day stock market rally to the 6,600 level.

The benchmark Philippine Stock Exchange (PSEi) finished with a 76.43-point or 1.17-percent gain on Friday to 6,606.94, its best close since September 23. Gains from Tuesday alone topped 200 points.

“Chart-wise, the local market has been able to maintain its position above the 6,400 level and has gotten past its 200-day exponential moving average last week,” Philstocks Financial Inc. senior research analyst Japhet Tantiangco said.

“However, the market has already been rallying for six straight weeks. With this, we may see episodes of profit-taking moving forward,” he added.

Tantiangco noted that investor optimism appeared to be building given indications that the US Federal Reserve and the Bangko Sentral ng Pilipinas would be easing up on interest rate hikes.

The peso’s strengthening — the currency closed at P56.67:$1 on Friday, its best finish since September 1 — is also boosting sentiment, he added.

Moving forward, investors are expected to take their cues from upcoming bank lending and purchasing managers’ index data.

The PSEi, Tantiangco said, could test the 6,600 level further.

Meanwhile, Rizal Commercial Banking Corp. chief economist Michael Ricafort said that latest economic data such as a narrower government budget deficit and improved foreign portfolio investments had helped lift market sentiment.

Bureau of Internal Revenue (BIR) collection gains, the peso’s appreciation and recent Covid-19 developments in China also contributed, he added.

“Any sustained breach above the 6,600 could lead to further upside potential towards a potential retest of the 6,800-7,100 levels,” Ricafort said.

Online brokerage 2TradeAsia, for its part, said US market movements — which often influence the PSEi — would depend on upcoming labor and manufacturing data that “could impact Fed movements, not only in the Federal Open Market Committee meeting on Dec. 14, 2022, but also at least for the first quarter of 2023.”

The PSEi’s strong technical rebound from a bottom of 5,800 in October, it said, was expected given a slew of aboveprediction of third quarter earnings reports and mostly positive capital expenditures projections for 2023.

“This makes growth stories slightly more compelling in this era where expectations are low in light of high interest rates plus slower macro growth,” 2TradeAsia said.

“While the market attempts to retest the 7,000 level in the medium-term, be wary of supply pressure on account of the PSEi’s strong 8-week market trend.”

2Trade Asia sees the PSEi’s immediate support at 6,400 with resistance at 6,800.