Market seen trading sideways on thin volume

MANILA, Philippines - Welcoming 2014 with a shortened trading week, the local stock market will likely trade sideways on continued thin volumes as investors are still on vacation mode.

The Philippine Stock Exchange index (PSEi) will try to test the 6,000 level this week on the back of early positioning on select stocks, analysts said.

“We think that movement this week will course sideways or generate modest gains with lower trading volume as investors are still on vacation mode and trading days for the week are limited,” said Abbygayle Estrella, equities analyst at AB Capital Securities Inc.

Astro del Castillo, managing director of First Grade Finance Inc., said nothing much will change compared with the market’s performance last week.

Del Castillo said thin trading will mark the first week this year, with most investors still on vacation.

Financial markets are closed on Dec. 30 (Rizal Day holiday), Dec. 31 (New Year’s Eve) and Jan. 1 (New Year holiday). Trading will resume on Jan. 2.

AB Capital pegged the support and resistance at 5,850 and 6,050, respectively.

Week-on-week, the PSEi gained 0.94 percent or 54.70 points to end the year at 5,889.83, posting its second straight week in the green. On an annual basis, the main index inched up 1.33 percent from end-2012’s 5,812.73.

“Seasonal boost from year-end window dressing gradually lifted Philippine shares to cap 2013 with just more than one percent gain from last year’s close,” Estrella said.

With no major local economic and corporate data expected this week, the stock market will look for leads abroad.

“The main index could also catch up on the developments abroad, among which is the market effect of the US economic data (manufacturing indexes, consumer confidence, and construction spending),” Estrella said.

The main index picked up 2.8 percent on Jan. 2 and 3 last year, putting to test the so-called January effect, Estrella said.

For del Castillo, investors will likely take early positions on select stocks, reacting to the activities of fund managers and bond market yields.

“We advise investors to stay on the sidelines as we do not expect much market action on the limited trading days,” Estrella said, adding that favored stocks are those focused on the consumer sectors.