PSEi may test 6,900 this week

MANILA, Philippines — The Philippine Stock Exchange Composite index (PSEi) may test the 6,900 support level this week with secondary support at 6,820, according to 2TradeAsia.com.

Resistance is expected to hover from 7,150 to 7,200 after the PSEi showed a strong return to the 7,000 level.

“The market’s  staying power will be tested, given heightened volatility from the upcoming earnings season – when capex spending and earnings per share recovery stories for the year are reaffirmed. Amid periods of rising consumer prices,  the best bets tend to be natural hedges (real estate, REITs, dividend stocks) and those that can pas-on the input cost burden to consumers,” 2TradeAsia said.

Last week, the PSEi recovered and nearly erased prior week’s losses as optimism returned on the back of President Duterte’s approval of the CREATE measure plus news that the country is approaching vaccine rollout.

“The PSEi jumped by 406 points to 7,019 (up 6.15 percent week-on-week) with all sectoral indexes rallying, primed by mining and oil which rose 7.64 percent, property which went up 6.76 percent and industrials which gained 6.31 percent,” 2TradeAsia said.

Average value turnover slightly declined to P9.97 billion, up 4.08 percent week-on-week.  Average net foreign selling eased to P530 million.

Gainers led the decliners, 127 to 87 on average.

Moving forward, 2TradeAsia said investors should brace for volatility as earnings season starts.

“On a more positive note, corporate stories will likely be tied to vaccine deployment and progress on this front, particularly as the LGU level, will help put a floor to any possible knee-jerk price action,” 2TradeAsia said.

2TradeAsia said inflation is likely to be a primary concern for the year, given the unique supply dynamics of major goods such as pork, grain, transport, oil and the unpredictability of pandemic-suppressed demand.