From a technical perspective the benchmark PSEi of blue chip issues is trying to establish a base at the 7,700 support level where market closed last week.
“This is an important level to watch, because a successful hold will create enough demand to sponsor further recovery towards 7,800 to 7,850 resistance targets,” Luis Limlingan, managing director at Regina Capital Development Corp., said in a weekly market note.
“On the other hand, failure to hold 7,700 will shift the weekly trend to a bearish, retesting the 130-day moving average or 7,600,” he added.
However, volatility continues to rule the market with moderate to sharp price movements.
“Until all corrective threats are cleared, the market is still seen to trudge sideways, Limlingan noted. “For this week, a cautious buying strategy is advised, especially for issues that have just broken out of their key resistance points.”
Online brokerage 2TradeAsia.com is looking the the market from another vantage point. With the end of September closing out the third quarter, fund managers are likely to go for “window dressing” to giver their portfolios better numbers.
“Some fund managers would take advantage of depressed prices and scout for stocks likely to outperform, especially during fourth quarter. Run-ups may also come from the spillover of positive sentiment from the latest Federal Reserve decision and reduced possibility of an interest rate hike in its next meeting in November due to the US elections,” 2TradeAsia.com said.
However, with the Organization of the Petroleum Exporting Countries (OPEC) having a meeting on the sidelines of the International Energy Forum (IEF) in Algeria on September 26 to 28, volatility be heightened.
“With Russia’s record high crude inventories, along with the recent restoration in Libya and Nigeria’s crude supplies, we could insinuate that at this rate, political will is likely to be tested,” according to the online brokerage.
Despite the sociopolital uncertainties supposedly muddling the domestic situation, the country remains resilient to global external shocks – resiliency that may later on manifest in the the market – with S&P Global Ratings retaining its “BBB” investment grade rating with a “stable” outlook.
“The affirmation shows our economy’s resiliency in global external shocks. On this strong foothold, investors should aim for fundamentally attractive stocks and take the opportunity from the recent decline to accumulate,” according to 2TradeAsia.
On Friday, the PSEi broke a four-day winning streak settling with a 0.50 percent or 38.75 points decline to 7,723.60. The wider All Shares dropped 0.36 percent or 16.34 points to 4,586.71.