Stocks seen sustaining momentum

MANILA, Philippines — The stock market is expected to sustain its upward trajectory this week as investors are likely to hunt for bargains.

Last Friday, the benchmark Philippine Stock Exchange index advanced for the second straight week, gaining 199.57 points or three percent as it ended back above the 6,800 level.

The market’s strong performance last week was fueled primarily by the much-awaited rate cut from the Bangko Sentral ng Pilipinas, coupled with easing recession worries in the US.

“The local market had a good run last week, rising three percent to 6,847.37 with value turnover going above year-to-date average. In the process, the market was able to get past its 6,700 to 6,800 resistance range,” Philstocks Financial research manager Japhet Tantiangco said.

Tantiangco said the local market’s MACD (moving average convergence/divergence) line has also crossed above the signal line, implying bullish momentum.

However, despite its two-week rally, he said the local market is still seen to be undervalued from a fundamental standpoint.

“Hence, we still see room for advancement,” Tantiangco said.

“With the Bangko Sentral ng Pilipinas already going for one 25-basis-point rate cut, together with the prospect of more monetary policy easing moving forward, we may see the market climb further this week,” he said.

Tantiangco said that easing recession worries in the US is also expected to help the local bourse if it continues.

“Chartwise, if the local market is able to sustain its position above the 6,700 to 6,800 range, this will be considered as its new support while its next resistance is seen at 7,000,” he said.

RCBC chief economist Michael Ricafort, on his end, said the underlying upward momentum for more than a week already remains intact for as long as the local stock market remains above the immediate support at 6,575 to 6,630 levels.

He said that the next target is the 7,000-psychological market, particularly the high of 7,070.72 posted more than four months ago.