Market to take breather after last week’s profit taking

MANILA, Philippines - The local stock market is expected to take a breather this week as a follow up to episodes of profit taking in the past few trading days.

Investors are advised to remain active in the local bourse by taking advantage of buying and selling opportunities, analysts said.

“Given the recent strong run up of the market, we are expecting a slight pull back to its support level at 6,520,” said Joyce Anne J. Ramos, analyst at AB Capital Securities Inc.

If breached, the bellwether index might further decline to the 6,400 level, Ramos said.

“What will keep the market buoyant are medium and long-term investors looking to position considering the positive outlook on the market,” said Nisha S. Alicer, research strategist at DA Market Securities.

Week-on-week, the Philippine Stock Exchange index (PSEi) rallied 3.17 percent or 201.58 points to end at 6,561.20, highlighted by its trek to the five-month high of 6,625. It also marked the second weekly gain of the main index, which was driven by favorable local news, and the release of US manufacturing and non-farm employment.

More activity was recorded in the stock market as average value turnover jumped to P9.2 billion from P8.4 billion a week ago.

“The week ended with investors finally succumbing to profit taking in the afternoon session, sending the PSEi lower to 6,561.20,” said brokerage firm RCBC Securities Inc.

For this week, potentially market-moving news abroad include the tentatively scheduled monetary policy statement of Japan, Federal Open Market Committee meeting minutes, consumer sentiment survey in US and China’s trade balance, Ramos said.

Amid strong US jobs data in March, Wall Street fell on Friday, dragged by several blue chips. The Dow Jones industrial average lost 0.96 percent or 159.84 points to close at 16,412.71, while the broader Standard & Poor’s 500 index shed 1.25 percent or 23.68 points to 1,865.09.

“Among domestic data releases to be expected next week are gross international reserves, merchandise export performance and foreign direct investments,” Ramos said.

“With this, we are advising investors to prudently take profits during market rallies and buy only when the market nears the support,” Ramos added.

For Alicer, investors may also look for laggards like banks and SM stocks that are indicating signs of technical reversal.