Market gains traction, may test 7,800 level

MANILA, Philippines - The bulls are back.

As such, the market is likely to continue gaining traction, with the benchmark Philippine Stock Exchange index (PSEi) possibly hitting the 7,800 level, traders said.

“Chartwise, the week’s close above the 7,600 levels continue to highlight the market rally is gaining traction.  Look for  further tests towards the 7,700 to 7,800 levels,” said Jonathan Ravelas, chief market strategist at Banco de Oro.

He said the market is likely to continue to range anywhere between the 7,400 and 7,800 levels.

Last week, the market barometer PSEi inched up 0.61 percent week-on-week to 7,629.64 for the third straight week.

Ravelas said foreign portfolio flows trickled back to the local markets after NEDA chief Ernesto Pernia said he sees first quarter economic growth closer to seven percent.

Foreign portfolio inflows on a month to day amounted to $178 million as of April 12.

Similarly, market research portal 2TradeAsia.com said post-Easter rallies are possible “especially after our local bourse has shown signs of resurgence following its breakout from its sideways trend since January.”

“Funds have shifted back to Philippine shores, backed by international agencies’ encouraging outlook on the economy’s fundamentals.  Optimism may soon build in the coming months, ahead of the first quarter interim announcement from listed shares.  Moreover, local equities have benefited from nine consecutive days of net foreign inflows starting March 31, while the peso regained its strength vis-à-vis the greenback, closing at 49.43 against the dollar last April 12.”

Investors will keep a close watch on geopolitical tensions across markets and will take their cue from political leaders’ pronouncement, specifically on areas that could weigh on the global economy and trade.

“Any provocative rhetorical statement could sway sentiment, as fund managers focus on upcoming meetings, particularly IMF’s summit on April 21 and OPEC Ministers’ meeting on April 22,” it also said.

Likewise, crude futures pricing would likely be on spotlight, after WTI crude jumped two percent last week due to escalating expectations suppliers would adhere to their agreed output cut. This early, commodity traders see increased chances for crude futures to jump above $54 percent barrel, which could push up inflation in the second quarter.