Index seen consolidating

MANILA, Philippines - The benchmark index will likely consolidate at current levels but with an upside on the back of strong first quarter corporate data and the absence of negative news.

Investors will gauge the strength of the US economy this week with the release of several consumer and employment data, analysts said.

“Trades might move sideways, possibly with a slight upward bias, as buyers check for possible quarter-end closing from some institutional fund managers,” said Grace Cerdenia, an analyst at brokerage firm 2Trade-Asia.com.

Cerdenia said the bellwether index might continue to trade within 6,300-6,450 as players look for stronger leads to support further rises.

Despite the recent weakness of the local bourse, “we still believe that the local bourse will recover and return to test its resistance levels at 6,550 should there be no negative market-moving reports to be released this week,” said Joyce Anne J. Ramos, an analyst at AB Capital Securities Inc.

Justino Calaycay Jr., an analyst at Accord Capital Equities Corp., said the immediate support lies at the 6,300-6,330 band, with the first upside technical target at the 6,400-6,420 mark.

Week-on-week, the Philippine Stock Exchange index (PSEi) gained 0.32 percent or 20.36 points to close at 6,359.62, snapping two consecutive weekly decline.

Average daily turnover weakened 19 percent to P7.254 billion but net foreign buying accelerated at P1.2 billion from P445 million a week ago as tensions in Ukraine took a backseat while US released mixed economic data.

Locally, the Bangko Sentral ng Pilipinas increased banks’ reserve requirement. Fitch Ratings affirmed the Philippines’ credit score at ‘BBB’ with a stable outlook.

For this week, both local and foreign developments will have a chance to dictate trading.

Ramos said note-worthy economic updates from the US include March inflation, US Federal Reserve chair Janet Yellen’s speech and unemployment rate data.

While improved consumer spending gauge in the US might provide a lift, Russia’s defiance of United Nation’s directive might temper gains, Cerdenia said.

“Others might check for first quarter 2014 indicative results, plus possible accumulation from large-ticket fund managers,” Cerdenia said, adding that immediate support is at 6,300, while resistance is at 6,370-6,390.

“Given this, we advise the investors to view the decline as a good opportunity to prudently accumulate stocks,” Ramos said.