Market may still perk up ahead of window-dressing season

If the past week’s trades would be used as the gauge in determining this week’s trend, then the market could spring a few more surprises ahead of the pivotal yearend window-dressing season, brokerage reports indicate.

Last week, a massive selldown in Meralco stocks dragged the market down early on, as expected. Apart from this, more bad news came in the way of the market: the depreciating peso, bloating budget deficit and the scaling down of the country’s economic targets for next year.

But in a surprising display of resiliency, the main index managed to bounce back by week’s end, closing just 3.91 points or 0.37 percent lower week-on-week to 1,054.80. This was on the strength of last Friday’s 23.97-point jump, practically offsetting Monday’s 24.23-point, Meralco-induced drop

"For now, we believe that the market already saw its bottom last October," a report by the local investment portal PhilStocks.net said. "Although the outlook on the economy is grim, the downward revisions on the country’s economic targets can still be a positive as it reduces the potential for futher shocks," it added.

The PhilStocks report said the new targets are more realistic and should take away the frustrations of over-optimism in the future. In addition, seasonal factors are now coming into force which could support a decent rally, the fourth quarter being the best time of the year for stocks.

"The November-December-January period is typically the time when window dressing is prominent and it is also the time when investors become more optimistic about the coming year and they become more aggressive in buying stocks," PhilStocks said.

Hinting of such aggressiveness, turnover volume became more pronounced last week as daily trades consistently breached past the P300-million mark, compared to an average of about P200 million the previous weeks.

In another research report, 2TradeAsia.com said while local investors might still adopt a wait-and-see approach if continuity will be made following last Friday’s recovery, possibilities for a more upbeat sentiment are likely to be greater this week.

"Others might start to focus on issues that have stayed on oversold zones for long, especially those that may have been swayed by sentiment on Meralco’s pending refund issue,"

Although investors will continue to assess and digest the unfolding of events in Meralco’s case, the stock could take the backseat this week to other corporate issues, in particular the play on Ayala Land and Metro Pacific and its sister company PLDT.

The two index heavyweights, PLDT and ALI cornered almost half of last Friday’s trades as market players focused on the stocks’ fundamentals, partly helped along by the rise in PLDT’s stock price in Wall Street and ALI’s deal with Metro Pacific for a controlling interest in the Fort Bonifacio development project.

"Although skeptics might still question the longevity of any near-term improvement, range-trading opportunities within 1,030 to 1,070 and possibly above 1,100 can be anticipated," 2TradeAsia said.

PhilStocks added that this week, the market will also be on watch for several other key events, among them the government’s third quarter GDP report, the manufacturing numbers and developments in Meralco.

"With the (corporate earnings) reporting season behind us and the Christmas season coming up, the market is likely to trade in a narrow range. Bias should be upwards as the Phisix has shown some positive indications for the short term," the PhilStocks report said.