Market may retest 7,300 on earnings optimism


OPTIMISM over third-quarter corporate earnings results could push the Philippine Stock Exchange index (PSEi) to retest the 7,300-point resistance level in the coming weeks.

With Friday’s surge sending the main index above the 7,200-mark, AB Capital Securities Inc. sees positive strides for the market in the succeeding weeks amid optimism over corporate earnings.

“Having entered into this quarter earnings season, investors are now positioning ahead of possible positive surprises in the succeeding weeks,” AB Capital said in a weekly market report.

“Stocks to keep an eye on next week include last season’s badly beaten consumer stocks such as Puregold Price Club Inc. and Cosco Capital Inc., gaming stocks such as Travellers International Hotel Group Inc. and Bloomberry Resorts Corp., and consumer discretionaries,” it added.

Given the positivity in the market at the moment, AB Capital expects the PSEi to retest 7,300 points in the coming weeks.

Luis Limlingan, managing director of Regina Capital Development Corp., gave the same forecast but also cautioned investors to keep an eye on the 7,160-points support, given the sudden surge of the main index to 7,200 points last Friday.

“A hold is recommended until we confirm new support. For the next two trading days, the index should not close below 7,160 or else corrections back to 61.8 percent (7,088) will surface… Hitting above minor resistance at 7,250 will be our key trigger and then we will change recommendation to a buy,” Limlingan said.

“In case this bullish scenario happens, there is an increased likelihood that 7,360 will be retested this week,” he added.

F. Yap Securities Inc., on the other hand, said in its weekly market report that bargain hunting should drive trading this week on the back of fourth quarter window -dressing, a reversal in foreign selling, as well as the nine months earnings reports of companies.

“Prospects for bargain hunting are seen, especially with fourth quarter window-dressing, the awaited push on gradual improvement in turnover at the local bourse (possibly back to P10 billion), plus noticeable reversal in foreign selling,” F. Yap Securities said.

“This week, locals might focus on the nine months earnings results but more for corporate earnings prospects for 2015. Balance portfolio selection between large and mid caps,” it advised.

Meanwhile, BPI Asset Management sees a possible correction sometime this week following last week’s sharp rise.

“We expect the local equities market to trade within the range of 7,070 to 7,331 with a downward bias as the sharp hike during the final trading hours of the day due to portfolio rebalancing is expected to be corrected next week. Moreover, earnings results of local companies would definitely direct the movements in the market,” BPI Asset Management said in a market report late last week.

Robust earnings results and Wall Street’s rally following better-than-expected US GDP data for the third quarter fueled buying of local stocks on Friday. The bellwether PSEi gained 44.74 points or 0.62 percent to close at 7,215.73 while the wider All Shares index advanced 25.05 points or 0.59 percent to 4,250.51.


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