PSEi to trade in narrow band due to Holy Week

Those hoping to see a strong recovery of the stock market this week may be disappointed, traders said.

With last week’s market plunge, the benchmark Philippine Stock Exchange index is seen resuming its tailspin. Any recovery may be limited, given that it’s also the Holy Week break.

“Chartwise, the week’s close at 7,970.80 signals further weakness toward the 7,500 to 7,800 levels. Any pullback, if any, might be limited to the 8,100 to 8,300 levels,” said Jonathan Ravelas, chief market strategist at BDO.

He said immediate support and resistance is seen at 7,800 and 8,100 levels, respectively.

Last week, the PSEi fell anew by 3.25 percent week-on-week for the fifth straight week to 7,970.80 as investors sentiment waned after a sell-off in the Wall Street.

Astro Del Castillo, managing director at First Grade Finance Inc. said with the Holy Week break, the market is not likely to recover this week.

Investors will likely stay on the sidelines and wait for better market moving news.

For his part, Chris Mangun of Eagle Equities said the market may see a selling climax soon.

“When this happens, we will begin to see a reversal in the coming weeks. With only three trading days this week, I think we will see the market trade within a tighter range,” he said.

The Banko Sentral ng Pilipinas (BSP) maintained interest rates, which came as a surprise to investors.

“Everyone was expecting a rate hike and its effect on the market. We may see the market consolidate at these levels before it starts going up again. I don’t see this market going below 7,700 and I believe we will see this market recover in the following weeks,” Mangun said.

He added the PSEi would have been down even more last week if not for the temporary recovery last Thursday when the index gained more than 100 points.

“However, volume is starting to pick up as it traded P53.56 billion which is very positive. We saw another week of massive net-foreign selling at P6.4 billion. Several blue-chip issues took a beating,” he said.

This, Mangun said, means more investors are converting to cash as they liquidate positions.

“On the other hand, there is another group of investors who are taking advantage of the situation scooping up these shares at a lower price,” he also said.