Stocks are expected to trade sideways this week, as investors closely monitor markets abroad and wait for local data releases such as the March inflation rate.
BPI Asset Management said the Philippine Stock Exchange index, the 30-company bellwether, was expected to trade within a range of 7,100 and 7,250 points this week.
Luis Limlingan, managing director of Regina Capital Development Corp., said the benchmark would continue to trade in a corrective mode, on concerns over valuation, after the market’s strong performance in March.
“Traders are still advised to keep their stop triggers close, because we expect volatility to remain. In case of rallies, we advise taking advantage of those to unload positions because we sell heavy resistance at 7,400,” Limlingan said.
Analysts said the volatile trading in the first quarter was expected to remain in the second quarter because of the developments overseas and the upcoming presidential elections in May.
Foreign investors are slowly coming back to emerging markets including the Philippines, following US Federal Reserve Chair Janet Yellen’s dovish statements regrading interest rate hike.
After five consecutive weeks of increases, the PSEi lost 1.6 percent last week to close at 7,245.13 on April 1, while the broader all-share index also went down by 0.6 percent to settle at 4,196.74.
The market started the week on a lower note as investors remained defensive ahead of Yellen’s speech and as the local bourse tracked weaknesses elsewhere in the region.
While the index posted a mid-week rally, as investors priced in dovish statements from the Fed, investors started cashing on gains by the end of the week, forcing the market to succumb to profit-taking.
Except for the industrial index, which climbed 0.9 percent, all other major indices ended in the red, led by mining and oil which dropped 3 percent, financials which went down by 2.1 percent and services which dipped 1.6 percent.
Foreign investors were net buyers last week, as total foreign buying reached P20.07 billion while overseas selling amounted to P19.74 billion.