Market seen posting gains

MANILA, Philippines - The return of investor confidence given reassurance on the continuing US Federal Reserve stimulus program will drive the bellwether index to post gains this week.

Investors are also expected to take positions ahead of the earnings season, analysts said.

“Unless another round of surprises come out of the woodwork, we expect the market to trade positively through most, if not through the entire week,” said Justino Calaycay Jr., analyst at Accord Capital Equities Corp.

The focus will be developments abroad, with more investors looking to pick bargains, said April Lee-Tan, vice-president and head of Research Department of COL Financial Group Inc.

“Equity markets are taking the US Fed’s cue positively,” said Jonathan Ravelas, chief market strategist of BDO Unibank Inc.

Week-on-week, the Philippine Stock Exchange index rose 1.13 percent or 73.73 points to 6,574.21. The main index enjoyed a rally late in the week as US stocks hit another record high after US Fed chairman Ben Bernanke said the easy money policy will continue for some time to cut unemployment rate.

Worries over the tempering of the US Fed’s $85-billion monthly bond buying stimulus, which has been jacking up liquidity in the financial markets, prompted fund managers to pull out of emerging markets like the Philippines.

Calaycay said the trek of global markets last week and the onset of the earnings season in the local front “should see the bears dialing down their rhetoric a couple of notches.”

Local firms are expected to start reporting first half results late this month.

“Expect the market to range between 6,250-6,750 levels. If 6,750 is tested may see test of 7,000 levels,” Ravelas said.

“Given the fact that we’ve rallied, you can see a lot of investors who have decided to stay on the sidelines start to come back and pick up bargains,” Tan said.

Calaycay advised investors to buy on dips as less intense bearish sentiments remain.

Tan said investors are seen to support select stocks that post large drops.

“The fact that we are rallying this month brings a stronger signal that we’ve seen the low,” Tan said.