"I think the market will probably move sideways. It will not likely go down substantially as we have already discounted geopolitical and interest rates concerns," said Jose Vistan of AB Capital Securities.
He expects the main index to trade between 2,150 points and 2,250.
The market had risen for five straight sessions until Wednesday amid signs the US Federal Reserve would halt its interest rate raising policy, but profit-taking emerged Thursday amid concerns over North Korea’s missile tests.
Despite last week’s rise, the main index is still about 12 percent lower than this year’s high of 2,589.17 points, recorded on May 8, which was also the index’s highest level in nearly seven years.
For the week to July 7, the composite rose 79.24 points or 3.64 percent to 2,258.03 points.
Average daily volume rose to 1.595 billion shares but average daily value fell to P1.234 billion compared to 800 million shares worth P1.445 billion in the previous week.
"Jitters from geo-political issues and persistent inflationary concerns will keep investors on the defensive. We have had a nice technical rebound after the market tumbled from its year high, however volumes have been thin, indicating that investors are still concerned," said Vistan.
Vistan said selling pressures could be minimal as traders see the exponential moving average level of 2,200 as an initial support.
The market’s immediate support level is at 2,200 while immediate resistance is seen at the 2,300 level, Vistan said.
Investors will closely monitor the Bank of Japan’s policy board meeting on July 13-14, which could result in a 25-basis-point rate increase in its benchmark interest rates, Japan’s first since 2001. "After the market gets a clearer picture on interest rates, attention will shift to corporate earnings," Vistan said.
Vistan said oil and mining issues are expected to generate some interest in the coming weeks with gold surging back above the $600 per ounce level and crude oil prices going up to new record high levels.
"Commodity prices particularly energy are seen to rise as a strong summer cooling season coupled with hurricane-related supply fears are conspiring to keep oil prices high this summer," Vistan said.
Among the issues that caught investors’ attention last week were Ayala Corp. closing at P405, PLDT (P1,975), BPI (P52), Ayala Land (P12.25), Metrobank (P36), and Meralco B (P23.50).
Erwin Balita of AB Capital said the brokerage house is optimistic about the country’s prospects given improving economic figures. The National Statistics Office recently reported that inflation rate for June slowed down to 6.7 percent compared with the 6.9 percent rate registered the previous month.
According to the NSO, inflation rate for food alone in the country went down to 5.6 percent in June from 5.9 percent in May.
Reports that the Bureau of Customs marginally exceeded its collection target last June of P18.5 billion as against the target of P18.4 billion are expected to drum up positive market sentiment, Balita said.