Analysts see the market in a bearish mode with a sideways bias as investors await the official numbers for the first quarter gross domestic product to be released on Thursday.
The benchmark PSEi is being viewed with a pessimistic eye after failing to pierce the resistance level over the 7,900 mark despite tracing some gains, AB Capital Securities Inc. said in its weekly market review.
“In terms of technicals, the index showed bearish signals… after failing to stay above the key resistance level at 7,930. Given this, we remain bearish in the near-term as the index may go back to its key support level at 7,700,” AB Capital said.
“Stochastics [a buy and sell indicator]is also showing further downtrend implying that the market sell-off may continue until next week. As such, we continue to advise investors to remain… defensive and wait for potential reversals before entering back into the market,” it added.
In another weekly review BPI Asset Management also expect the market to register declines this week before expressing the general sentiment with the first quarter GDP as catalyst.
“We expect the PSEi to trade range-bound between 7,730 and 7,900 with downward bias. Movements will be strongly influenced by the results of the first quarter GDP,” it said.
Online brokerage 2TradeAsia.com also took note of a GDP play this week.
“This week, players will also check on first quarter Philippine GDP and results need to be compelling to stave off April’s net foreign selling of P8.7 billion,” said Jason Escartin, investment analyst at 2TradeAsia.
“Long-term prospects are still in place, given the country’s reaffirmed strong fundamentals, plus listed companies’ capex initiatives for the remainder this year. It might be worth looking into buying windows in retail/consumer-related plays, especially those with good price targets,” Escartin said.
Because Philippine equities failed to break the 7,950 target last week, the upside potential this week is likely capped, said Luis Limlingan, managing director at Regina Capital Development Corp.
“By failing to break last week’s 7,950 target, we are seeing a continuation of this trend at least for the next one to two weeks until a clear reversal is triggered. Bullish condition (PSEi above 7,950 points) remains the same while pegging key support at 7,689,” he said.
Earlier, Limlingan also said he expects the first quarter GDP to serve as the main catalyst for market in the latter part of this week.
Investors, however, should watch out if the GDP numbers drop below 6.7 percent that could further stoke selling pressure towards 7,400 over the next few days.
A GDP above 6.7 percent may ease some of the selling pressure and allow some buying space until at least the next resistance level.
On Friday, the PSEi capped the session with a 0.32-percent decline or 25.21 points to 7,810.17. The All Shares lost 0.34 percent or 15.41 points to 4,493.54.