THE MAIN INDEX may continue to trade in a tight range this week as investors look at whether companies can sustain their growth momentum in the first quarter for the rest of the year.
The Philippine Stock Exchange index (PSEi) dipped 0.28% or 21.84 points to 7,672.28 last Friday due to rising inflation woes alongside higher Treasury yields in the United States.
The market was down for most of the week except on Tuesday, when it saw extended optimism from investors after the Bangko Sentral ng Pilipinas raised interest rates by 25 basis points.
On a weekly basis, the index fell 1.03% or 79.83 points, weighed down by a 3% drop in holding firms and 2% decline in industrials. The property sector was the lone sub-index that ended in the green for the week, which analysts attributed to the growth of real estate developers for the first quarter.
“(S)everal companies posted tremendous growth in the first quarter. We continue to be bullish on property stocks as the real estate sector proves to be very strong in terms of sales,” Eagle Equities, Inc. Research Head Christopher John Mangun said in a weekly market report, noting that Megaworld Corp. and SM Prime Holdings, Inc. were among the top gainers for the week.
Meanwhile, net foreign selling stood at P550 million on average for the week.
“As we go into the new trading week, based on the market sentiment, the index will continue to trade within this congestion area between the strong support at 7,500 and the resistance at 7,830,” Mr. Mangun said.
Online brokerage 2TradeAsia.com said investors will be looking at whether index stocks will be able to sustain their double-digit growth last quarter.
“Greater weight has been placed on listed firms’ ability to weather out inflation, given the latest volatility in oil prices, provisions for the second phase of tax reform plan, and forex volatility, among others,” 2TradeAsia.com said in a weekly market note.
The company noted geopolitical tensions may also weigh on investor sentiment for the week.
US President Donald J. Trump recently announced the country’s withdrawal from its nuclear agreement with Iran, which was made together with Europe in 2015.
“The uncertain outcome of whether the US government would enter into a revise deal with Iran, will likely create increased volatility for commodities, as higher fuel prices will be weighed relative to real returns,” 2TradeAsia.com said.
Eagle Equities’ Mr. Mangun placed the index’s likely support at 7,500 to 7,625 and resistance from 7,830 to 7,900.
“If we see a pickup in volume, the index may break above resistance and try for the next one at 8,000. A break of 8,000 will confirm a trend reversal which will bring investors back into this market,” Mr. Mangun said. — Arra B. Francia