Stocks seen consolidating with upward bias this week

MANILA, Philippines - Local stocks may go through a period of consolidation this week with a slight upward bias.     

The main benchmark index kicked off the new year in upbeat fashion, barreling to a new record close of 5,971.45 or 2.73 percent higher from a week earlier on the back of strong foreign investor buying. 

“Bullish sentiment is still seen to continue in the short-term due to seasonality in January. The passing of the fiscal cliff deal in the US as well as encouraging economic data have helped retain positive sentiment,” said Ghia Paula L. Yuson, research analyst at First Metro Securities Brokerage Corp.   

The positive developments overseas, particularly in the US, have boosted investor sentiment and could send the market higher to as much as 6,128, Yuson said.

Yuson, however, warned that prices might have moved too fast which could lead to a short-term pullback.

“Traders who are already long are recommended to hold their positions and lighten up on a break of the short term trend line at 5900 or the previous resistance at 5866. Those who are looking to buy are recommended to buy on dips, preferably after the market makes a higher low,” she said.     

Freya Natividad of local stockportal 2tradeasia.com said in case momentum is maintained and barring unexpected negative surprises, the PSEi might test 6500 over the near-term.  “Bulk of the boost will come from improved government & corporate expenditure,” she said.

Another factor that could drive investor demand is the anticipated credit rating upgrade of the Philippines this year from multilateral agencies.