Stocks expected to trade within range this week

MANILA, Philippines - Philippine stocks are expected to trade at a range this week, moving alongside numerous unfolding events here and abroad.

The recent rally in the stock market has strengthened the support level of the bellwether index at the 6,000 territory, analysts said.

“Four events will keep investors alert this week: the US Fed and China’s economy on the global stage, and the Zamboanga siege and the pork barrel scam on the domestic front,” said Justino Calaycay Jr., an analyst at Accord Capital Equities Corp.

Immediate and major support is at 6,100 and 5,900, respectively, Calaycay said.

Miguel A. Agarao, an analyst at Wealth Securities Inc., said the main index is seen to range trade at the 6,000 to 6,300 territory.

“Chartwise, the market’s inability to stay above the 6,150-6,200 levels casts a shadow of doubt on the current market’s bounce,” said Jonathan Ravelas, chief market strategist of BDO Unibank Inc.

Week-on-week, the Philippine Stock Exchange index (PSEi) rallied 2.65 percent or 158.62 points to 6,133.24 from 5,974.62, snapping two consecutive weeks of losses.

Ravelas said investors were somewhat appeased after US President Barack Obama asked the US Congress to delay a vote authorizing a military strike in Syria.

With easing geopolitical tensions, Calaycay said stocks already climbed back to the level when the planned military strike was made public.

However, profit taking and hefty declines in water utilities’ stocks dragged the main index in the past two days.

“Technically, the declines of the last two sessions have tempered the short-term upside momentum,” Calaycay said.

“The medium-term, while still generally favoring the bears, has gradually shifted to a sideways direction with a creeping positive bias,” Calaycay added.

For this week, the PSEi can retest the 5,500-5,700 levels should it fall below the 6,000 territory, Ravelas said, adding that “only a move back above the 6,250 levels will call the bulls back to play.”

In terms of market movers, analysts point to the tapering of the US Fed’s stimulus program and local news.

“There is that little negativity for the market going into this week,” Jose Mari B. Lacson, head of research at stock brokerage Campos, Lanuza & Co., said in a phone interview.

Lacson said the market expects the US Fed to start its gradual pullout of the stimulus program, which has jacked up the liquidity in financial markets.

Investors will also be monitoring investigations on the pork barrel scam and the ongoing firefight in Zamboanga, which has disrupted the province’s economy.