Stocks drop on profit taking ahead of BSP review

STOCKS declined on Wednesday as investors pocketed their gains from the market’s recent rally ahead of an expected rate hike by the Bangko Sentral ng Pilipinas (BSP).

The Philippine Stock Exchange index (PSEi) went down by 31.65 points or 0.46% to close at 6,818.99 on Wednesday, while the broader all shares index slipped by 5.20 points or 0.14% to 3,619.88.

Mercantile Securities Corp. Head Trader Jeff Radley C. See said the market declined due to profit taking.

“The PSE index has been bullish as foreign funds went into shopping spree for the past four days,” Mr. See said in a Viber message. “Investors are seeing good quarterly reports and inflation numbers are making a U-turn.”

“After seven consecutive days of gains, investors took some gains, bringing the local bourse to 6,818.99, down by 31.65 points or 0.46%,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message.

“The profit taking was also ahead of the interest rate decision of the Bangko Sentral ng Pilipinas,” she added.

The central bank is widely expected to raise its benchmark rates anew on Thursday, with most analysts forecasting a 50-basis-point (bp) increase as inflation remains elevated.

A BusinessWorld poll held last week showed 16 out of 18 analysts expect the BSP’s policy-setting Monetary Board to hike rates at its Aug. 18 meeting.

Headline inflation quickened to 6.4% in July, a near four-year high. This was also faster than the 6.1% in June and 3.7% a year ago.

For the first seven months, headline inflation averaged 4.7%, higher than the 4% seen in the same period in 2021 and the central bank’s 2-4% target for the year but lower than its 5% forecast.

The Monetary Board has raised rates by a total of 125 bps since May, including a 75-bp off-cycle hike last month.

The majority of sectoral indices ended in the red on Wednesday except for mining and oil, which went up by 157.02 points or 1.31% to 12,076.96; and holding firms, which climbed by 28.45 points or 0.42% to 6,668.19.

Meanwhile, industrials dropped by 88.26 points or 0.88% to 9,901.85; property went down by 24.19 points or 0.78% to 3,072.65; services declined by 12.88 points or 0.73% to 1,744.37; and financials lost 11.25 points or 0.69% to finish at 1,598.94.

Value turnover declined to P8.04 billion on Wednesday with 1.17 billion shares changing hands from the P8.89 billion with 967.13 million issues seen the previous trading day.

Advancers outnumbered decliners, 117 versus 94, while 34 names closed unchanged.

Net foreign buying declined to P857.07 million on Wednesday from P1.27 billion seen the previous trading day.

Philstocks’ Ms. Alviar placed the PSEi’s immediate support at 6,800 and resistance at the 7,000-7,100 range, while Mercantile Securities’ Mr. See put support at 6,400 to 6,600 and resistance at 6,900. — J.I.D. Tabile