Market may rally this week

MANILA, Philippines — The stock market may be heading nearer to a rally after encountering weeks of difficulties, traders said.

Traders said that if the stock market index stays above 8,000, the next target is 8,140 which could be the beginning of a rally.

“Once it breaks above 8,000, the next target will be 8,140 and if that is breached, we may see it rally to 9,000. Investor sentiment will improve dramatically once it breaks above these key levels,” said Christopher Mangun, head of research of Eagle Equities.

Cristina Ulang, vice president at First Metro Investment Corp., said the market may see an extended, but slow climb this week.

“The equities market might take inspiration from the liquidity breather of dropping peso yield curve which saw the 10 year government bond dip to a low 5.5  percent on delayed retail treasury bond issue,” Ulang said.

Last week, the equities markets had mixed performances.

At the Philippine Stock Exchange, the main index ended lower after the selloff that was seen at the beginning of the week.

The Philippine Stock Exchange index was down almost two percent on Monday, and then slightly recovered toward the end of last week. 

Mangun said the deadline could have been a late reaction to the inverted yield curve in US treasury bonds that happened in the week before. 

“It is a very good sign that the main index was able to end the week above the 7,900 support level despite the big drop that we had last week. Trading volumes were extremely thin with turnover value at P28.14 billion. This is the lowest weekly value turnover since the beginning of 2019. Despite this, foreigners took the opportunity to come into the market and scoop up shares with foreign net-buying at a whopping P3.64-billion. All sectoral indices ended lower except for the property sector that was up slightly,” Mangun said.

Overall, the PSEi ended the month of March higher by 2.8 percent, a complete reversal from its February performance. 

Investor sentiment, however, is still cautious which explains lower trading volumes.

Nevertheless, Mangun said a break above 8,000 would be very positive and may prompt investors to come into the market with conviction which in turn will help fuel the PSEi’s rally.