Market to trade in tight range this week

MANILA, Philippines — Stocks are expected to trade at a tight range this week – shortened by the All Saint’s Day holiday – with profit takers and bargain hunters mixing portfolios.

Last week, a buying spree ensued to push the benchmark index past the 6,000 mark.

The main Philippine Stock Exchange index (PSEi) broke past the 6,200 level before ending the week at 6,153 or 169 points (2.84 percent) higher from the previous week.

“While the trek north of 6,000 was welcome, the market is left wanting for stronger impetus to carry it convincingly toward the 6,500 to 6,700. Range-trade while funds seek inspiration, noting that intraday selling pressure makes settling for modest gains the more optimal play for now,” stock portal 2TradeAsia said.

It sees immediate support at 6,000 with resistance at 6,200 to 6,300.

Other factors that may affect this week’s trading  include the more upbeat fundamentals, especially going into the last two months of the year, 2TradeAsia said.

“The last two months of the year usually offer more upbeat fundamentals than most months of non-election years, courtesy of holiday-related spending on consumer goods, tourism windows due to non-working days concentrated around November to December and OFW receipts historically trending higher, among other factors,” it said.

However, it noted that consumer spending would likely be lower due to still high inflation.

“But a key takeaway from third quarter earnings reports so far show surprising inelasticity even in middle to low income segments. Overall, volume-driven sectors should enjoy some benefit of EBIDTA, which further underscores screening out highly leveraged plays this early as non-core items will be fully booked in the fourth quarter,” it said.

Unicapital Securities said the PSEi extended its gains last week because the local currency strengthened and the government’s fiscal deficit narrowed in September.

The national government’s budget deficit slightly contracted as revenue growth outpaced spending, data from the Bureau of the Treasury (BTr) showed.

Investors are showing more conviction for third quarter earnings as seen in the strong value turnover at P5.64 billion.