Index may climb anew this week
The stock market index may build momentum and trade in a new range this week as it inches higher due to foreign fund inflows and improving investor sentiment, according to Chris Mangun of AAA Securities.
“There is a strong possibility that it could continue to inch higher due to foreign fund inflows and the improving investor sentiment. We may see it build momentum and trade in a new range. The key is for it to stay above 8,000,” he said.
BDO Research shares the same view. “The week’s close at 8,065.76 highlights another try toward the 8,200 to 8,420 levels in the near-term. Failure to break above said levels could lead to more profit-taking and bring the index below the 8,000 levels anew,” it said.
Mangun said a break below this level will turn investors bearish and may send it all the way back to a strong support level.
“Once investors realize how well our economy has performed and start looking at fundamentals again, we will see investors flood back into this market and take it to new highs,” he said.
Market barometer PSEi rose by 1.11 percent week-on-week to 8,065.76 as investors accumulated stocks following a better-than-expected growth numbers.
This after the government reported that the economy accelerated to 6.2 percent year-on-year in the third quarter from 5.5 percent in the previous quarter, higher than the six percent median estimates.
This caused the PSEi to hit an intraweek high of 8,216.92 last week.
Moving forward, Mangun said the company is looking to the financials sector to lead the rally as banks would continue to post enormous growth due to rate cuts from the central bank.
“The next few weeks will determine if we are going to see a Christmas rally which investors have always looked forward to at the end of the year. The main index has traded sideways since the beginning of the year, building momentum for a bigger move. We are still convinced that it is going to be a move higher in the long term despite all the gloom and doom that we are seeing abroad,” Mangun said.