Index seen moving closer to 6,300 this wk

MANILA, Philippines - Buying momentum from the best week of the local bourse thus far will allow the benchmark index to march closer to the 6,300 territory, analysts said.

Pullbacks in the shortened trading week is seen as bargain hunting opportunities especially when economic news here and abroad turn out positive, they said.

“For this week, the strong momentum will still be in favor of the Philippine Stock Exchange index (PSEi) but it also faces the next psychological resistance at 6,270 that was last visited on Dec. 2,” said Abbygayle Estrella, analyst at brokerage firm AB Capital Securities Inc.

There is a positive bias towards the 6,250 resistance level, with profit taking on the side, said Freya B. Natividad, an investment analyst at Papa Securities Corp.

The bellwether index will test the 6,200 level on the return of investor optimism, especially from foreigners, said Astro del Castillo, managing director of First Grade Finance Inc.

“PSEi breaking above the 6,170 level signals further tests towards 6,350. Near-term support lies at 6,000,” said Jonathan Ravelas, chief market strategist of BDO Unibank Inc.

Week-on-week, the PSEi rallied 3.41 percent or 204.41 points to finish with an eight-day climb at 6,191.50.

Last week, the main index pierced through the 6,000 territory for the first time this year following the International Monetary Fund’s upgraded forecast on Philippine economic growth despite recent disasters.

But profit taking might temper the climb of local equities in the shortened trading week. Financial markets will be closed on Jan. 31 in celebration of the Chinese Lunar New Year.

“Expect profit taking this week in the four-day trading week,” del Castillo said. However, the retreat is healthy to prevent a too-fast-too-soon scenario like early last year, he said.

On Friday, Wall Street plunged on economic and political concerns in emerging markets like China, Turkey, Argentina and Ukraine. The Dow Jones Industrial average sank 1.96 percent or 318.24 points to 15,879.11, while the broader Standard & Poor’s 500 index shed 2.09 percent or 38.17 points to 1,790.29.

“We advise investors to take advantage of pullbacks to enter positions,” Estrella said, adding that the strong support level of 6,000 should entice bargain hunters.

Investors will be on the lookout for numerous news this week like the final US Federal Open Market Committee Meeting to be led by outgoing chairman Ben Bernanke, US corporate earnings reports and the fourth quarter Philippine gross domestic product (GDP) data.

“The best case scenario of claiming both stronger-than expected GDP and better leads abroad could spring the PSEi to 6,400,” Estrella said.