Share prices are expected to sustain their upward momentum and test the 6,000 level on improving investor sentiment.
Analysts said the year-end Santa Claus rally could also help push the market back to the 6,000 level.
“The local market has shown signs of life last week, bouncing strongly on the back of positive narratives. However, technically, the market is still considered to be on a downtrend,” said Japhet Tantiangco, research head of Philstocks Financial Inc.
To negate its current trend, Tantiangco said the index must establish a high exceeding its previous one of 6,141.87, touched on Oct. 20.
Despite last week’s rally, Tantiangco said the local bourse remains undervalued with a price-to-earnings ratio of 10.0x, below its last five years’ average of 17.3x and the regional average of 17.9x.
Philstocks said investors would need to see more positive catalysts to sustain bargain hunting activities.
“Without such, we may see the market succumb to profit taking again, especially since concerns over the corruption issues and the local economy’s outlook are still weighing on sentiment,” Tantiangco said.
Other catalysts that could push the market higher include the appreciation of the peso against the dollar and dovish cues from the government’s economic managers.
Last week, the Philippine Stock Exchange Index rallied to close at 5,997.13, up 7.4 percent week-on-week, while the broader all shares index grew 4.85 percent to 3,418.52.
Foreign investors were net buyers with inflows at P3.05 billion.
Average daily value traded improved to P8.9 billion from the previous week’s average of P6.85 billion.
