Stocks trading to remain sluggish this week — analysts

After a brief dose of excitement stirred by the rumored buy-in of the Gokongwei group in PLDT, the stock market settled down just as easily and returned to its usual sluggishness, a scenario that’s likely to extend until this week.

"For (this) week, the market could be in for some sluggish trading ahead of the next earnings period. It’s unlikely the market will develop a sustainable trend either up or down over the next couple of months," a report by the local investment website PhilStocks.net said.

It pointed out that the most likely scenario is for the main index to move within a narrow trading range made up of a series of short-term rallies and reactions. "Upturns have been short-lived as investors quickly cashed in profits," PhilStocks said.

Last week, the Phisix was pulled up by talks of a major acquisition and the government’s announcement of mild economic growth during the first quarter, helping overcome jitters brought on by the bearish mood in the global markets.

However, PhilStocks said the push wasn’t enough to pull the main index to the green as overall, the market’s mood was still cautious and in keeping with the negative tone that has characterized trading for most of the month.

The market edged lower by the end of the week as the speculative interest centered mainly on the few issues connected to the rumored acquisitions subsided. The Phisix ended 20.12 points or 1.51 percent lower week-on-week to 1,315.

In its own report, BPI Securities’ online portal bpitrade.com said the new weightings of the Morgan Stanley Capital Index (MSCI) that took effect last Friday overshadowed the speculative interest in the issues related to the PLDT buy-in (PLDT, Digitel, Metro Pacific, JG Summit and Piltel).

BPI Securities said as speculations on these stocks weakened, investors focused on the adjustments in the MSCI index with fund managers correspondingly adjusting their equities portfolio.

"Investors are likely to wait for more corporate developments given the volatility in the market. Investors are also looking for more definite news regarding the First Pacific’s possible stake sale in PLDT and MPC," BPI Securities said.

It added that until such time the parties involved issue definite disclosures regarding the acquisition, speculation and the attendant buying will continue. However, as in the case with speculative-based buying, this support is fleeting with profit-taking likely as share prices rise or as news filters into the market.

"The lack of fundamentally driven accumulation would indicate that the market remains weak and should remain in consolidation. We continue to eye support at 1,290 to 1,300," BPI Securities said.

The PhilStocks report supported this sentiment, noting that the lack of activity will make share prices susceptible to selling pressure, since low volume can exaggerate gains or losses.

"And psychologically if we close below the critical 1,320, it could bring on more selling later. We need to see the Phisix establish a strong and confirmed base above 1,300," it added.