Profit taking seen this week amid lack of leads

PHILIPPINE SHARES may move sideways this week as investors could pocket profits from the market’s recent rise amid a lack of leads.

The bellwether Philippine Stock Exchange index (PSEi) gained 33.64 points or 0.52% to end at 6,437.38 on Friday, while the broader all shares index went up by 8.03 points or 0.23% to 3,396.63. 

Week on week, the PSEi rose by 150.61 points or 2.4% from its close of 6,286.77 on Nov. 11.

Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message that the PSEi went up on Friday as investors digested the third-quarter financial reports of companies that came out last week and after the policy decision of the Bangko Sentral ng Pilipinas (BSP).

Ms. Alviar added that foreign buying continued to lift the market. On Friday, net foreign buying stood at P652.19 million versus the P1.23 billion in net selling recorded the day prior.

“The market ended in green, maintaining its bullish sentiment after the widely expected 75-basis-point (bp) rate hike from the BSP, which is already priced in,” AP Securities, Inc. Equity Research Analyst Carlos Angelo O. Temporal said in a Viber message on Friday.

“Another factor that we see is the significant drop in oil prices, which is a key driver of inflation at home,” Mr. Temporal said.

The BSP on Thursday delivered an outsized rate hike to rein in rising prices as it sees inflation continuing to overshoot its target until next year.

The Monetary Board increased the overnight reverse repurchase or policy rate by 75 bps to 5%, the highest in nearly 14 years. The rates on the central bank’s overnight deposit and lending facilities were also increased to 4.5% and 5.5%, respectively.

The central bank has now hiked rates by 300 bps since May.

For this week, Mr. Temporal said the market may continue its rally, but profit taking could ensue as investors look for leads.

“We see some continuation in its rally but could be short-lived on potential profit taking as the market awaits further catalysts, prompting investors to take cues from US market sentiment in the meantime,” Mr. Temporal said.

Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said the market will look to continue last week’s earnings-driven rally.

“Aside from this, investors are also expected to look for cues with respect to the monetary policy outlook of the Bangko Sentral ng Pilipinas and the Federal Reserve. Cues that would point to a slowdown in their monetary tightening may lift sentiment, while cues that would point to a continuation of their aggressive policy path may lead to otherwise,” he added.

Mr. Tantiangco said the index may retest the 6,400 resistance level this week.

Meanwhile, put the PSEi’s support at 6,300 and resistance at 6,500-6,600, while AP Securities’ Mr. Temporal placed support and resistance at 6,300 and 6,500, respectively. — Ashley Erika O. Jose