Mart likely to retest 7,300 level

MANILA, Philippines - High expectations are expected to prevail in the local stock market this week after capping off the month of October with a bang.

Analysts said investors would be in the hunt for indications on third quarter corporate earnings to validate elevated stock prices.

Following Friday’s strong finish at 7,215.73, the bellwether index is seen to re-test the 7,300 level this week, analysts said.

Having entered into the third quarter earnings season, AB Capital Securities Inc. analyst Alexander Tiu said the market will remain bullish this week barring any unlikely surprises in the companies’ nine-month business results.

“With the confirmed bullish breakout, we expect the index to re-test the resistance at 7,300 in the coming weeks,” the AB Capital research team said.

The last time the Philippine Stock Exchange index (PSEi) stepped above the 7,300 mark was on Sept. 25 when it closed at 7,356.99.

“Prospects for bargain hunting are seen, especially with fourth quarter  window-dressing.  This week, locals might focus on nine months 2014 results, but more for corporate earnings prospects for 2015,” said Jason T. Escartin investment analyst F. Yap Securities.

Week-on-week, the PSEi scored 112 points or 1.6 percent higher on the back of upbeat US third quarter gross domestic product data and the Federal Reserve’s decision to keep interest rates low even after ending their asset purchase plan.

Turnover value, however, remained thin at only P6.8 billion on the average.

Luis Limlingan, head of business development at Regina Capital Development Corp., said a hold is still recommended for the meantime until a new support is confirmed.

“For the next two trading days, the index should not close below 7,160 or else corrections will surface. For advances above Friday’s high, hitting above minor resistance at 7,250 will be out key trigger and then we will change recommendation to buy. In case this bullish scenario happens, there is an increased likelihood that 7,360 will be retested this week,” Limlingan said.