The past week, the main index slid to a fresh 10-year low as rumors of a coup attempt against the Arroyo government and the hard clamor by organized labor groups for a P125 daily wage hike further spooked investors.
BPI Securities vice president Spencer Yap said while the market had shown some resiliency by bouncing back from a 10-year low, it has remained tentative, with rallies petering out as corporate news and international events overtake buying sentiment.
"The low prices at this time presents opportunities for accumulation, but a sustained rally may not be forthcoming over the medium-term," he said.
Yap said as expected, investors have taken their cues from third quarter profit performances, as in the case of index heavyweights Meralco and San Miguel, although both on a disappointing note.
"We expect the market to move sideways as the early earnings report continue to point lower earnings for the third quarter. Investors will likely await the release of third quarter results to search for direction," added BPI Securities senior analyst Roberto Cano.
He said since the market’s value turnover has remained low, this may be an indication that the selling pressure is lightening up and could spur buying activity on selected stocks.
"The market is likely to consolidate between 980 to 1,050," Cano said. Last week, the Phisix closed at 1,002.52, shaving 16.92 points or 1.66 percent from the previous week.
From a technical standpoint, Cano said the break from the 1,000-point psychological resistance level could be a sign of market strength as it continued to move higher after it whipsawed in the earlier sessions.
"However, we still have to see if the market will hold support at 1,000 and then break the 1,050 resistance. A break above 1,050 would be bullish since this would complete a double bottom. But we expect the market to continue its consolidation within the 980 to 1,050 range," Cano stressed.
Providing some impetus for accumulation was news of the definitive sale of Cosmos Bottling Corp. to the San Miguel group, although this was slightly offset by SMC’s nine-month earnings report which was slightly lower at P4.8 billion compared to the same period last year, casting doubts on income contribution from new acquisitions.
Likewise, speculations on port operator ICTSI negotiating for the Taiwan port also provided excitement to the market. ICTSI was in fact the week’s top gainer, posting an increase of 15.87 percent as investors also took notice of the cash inflow from the sale of its international operations as well as new opportunities which have presented themselves.
The government’s deferral of the disposal of its stake in power firm Meralco also cooled interest in the issue. Adding to the pressure on the issue was the release of weak third quarter results showing a 42.5 percent decline in profits.