Market seen to trade sideways this week

MANILA, Philippines - The local stock market is expected to trade sideways with an upward bias this week but gains will be tempered by profit taking.

Foreign leads will continue to dominate trades, with worries over weak economy and emerging market currencies at the forefront, analysts said.

“For this week, we expect the main index to move sideways with the tendency to approach the strong near-term resistance at 6,200,” Abbygayle M. Estrella, an analyst at AB Capital Securities Inc.

“This week, there are possibilities of corrections as the Friday rally is not as convincing given low participation,” said Freya B. Natividad, investment analyst at Papa Securities Corp. Natividad pegged the support level at 5,900 and resistance at 6,100

Justino Calaycay Jr., an analyst at Accord Capital Equities Corp.,  said the general backdrop of the local bourse signifies it still is a good time for equities over the medium- to long-term “but the sensitivity of investors to shocks in the daily news clouds over the optimistic view.”

Week-on-week, the Philippine Stock Exchange index (PSEi) shed 0.50 percent or 30.05 points to settle at 6,011.14, marking its second straight weekly decline. The main index recovered some losses is incurred when it broke the 6,000 support level, dragged by weak manufacturing data in US and China and concerns over currencies of emerging markets.

Natividad, said investors are worried that central banks’ window of keeping interest rates low are narrowing amid higher inflation.

The recent run-up of stocks “provides an opportunity for investors to cash in their gains from the recent bargain-hunt,” Estrella said.

Calaycay said “the preponderance of opinion favoring a sideways moving market magnifies the prudence of booking profits as the market and share prices approach, hit or briefly breaks past technical resistance points.”

Still, investors will focus on foreign leads for this week, 

“We will continue to look at trend in other markets, which have been influencing us in the past months,” Astro del Castillo, managing director of First Grade Finance Inc., said in a phone interview.

On Friday, Wall Street improved anew after nonfarm payrolls added 113,000 jobs in January, below the forecast of 185,000. This will give the US Federal Reserve the leeway to maintain the pace of its stimulus program.

The Dow Jones industrial average rose 1.06 percent or 165.55 points to 15,794.08 while the broader Standard & Poor’s 500 index added 1.33 percent or 23.59 points to 1,797.02.