Per Denise A. Valdez, Senior Reporter
The MAIN INDEX may start to fall this week, after five consecutive days of increases that brought it to 6,484.06 on Friday.
The Philippine Stock Exchange (PSEi) benchmark index gained 139.43 points or 2.19% in the last trading session, maintaining a one-week high that raised the index by 585.59 points or 10% on a weekly basis.
Turnover in value grew 54% to an average of P8.5 billion. Foreign investors became net sellers, posting an average net inflow of P4.12 million from the previous week’s average net outflow of P726.6 million.
“The local market showed a strong recovery that raised it 9.93% in the week. With the rapid increase, however, the local stock exchange is now in overbought territory, making it susceptible to profit making. So we can see a downturn in this week’s trading, ”said Japhet Louis O. Tantiangco, a senior research analyst at Philstocks Financial, Inc., in a text message.
The prospects for economic recovery supported by the easing of several quarantine rules and the beginning of the release of third quarter earnings reports helped lift the market last week. PSEi marked its best week since June, after breaking through the 6,000 level.
Although some profit-making is expected this week, Mr. Tantiangco said the PSEi should still remain in the support range of 6,000-6,100 due to sustained optimism for the fourth quarter.
Specific catalysts for this week’s trades will be BDO Unibank, Inc’s earnings reports; Manila Electric Co.; and Puregold Price Club, Inc., online brokerage 2TradeAsia.com said.
“(They) would set the tone for the negotiations, not only because of their size (~ P900 billion in market capitalization, 10.7% of the PSEi basket) and contribution to their parent companies, but also as representatives for their respective sectors , being industry leaders, ”he said in a market note.
“A critical price difference between 6,000 and 6,750 made during the collapse of March will be the next hurdle. This is probably the next resistance, especially with the index trying to find a more stable position above 6,000, ”said 2TradeAsia.com.
As for the downside risks, Philstocks’ Tantiangco said investors would be watching the coronavirus count. Any spike due to the relaxation of quarantine rules can cause investors concern.
The Health department reported 2,057 new cases of coronavirus on Saturday, resulting in a total count of 367,819 cases.
Another factor that could pull the local market down is the negative news about ongoing negotiations for a US fiscal stimulus, as it can weigh on Wall Street and therefore have an impact on the PSEi, Tantiangco said.
Philstocks is putting the market support at 6,000-6,100 and resistance at 6,600. 2TradeAsia.com placed immediate support at 6,000 and resistance between 6,500 and 6,750.