Profit taking to pull PSEi down amid lack of leads

Philippine shares may decline this week as investors are expected to pocket their gains from the market’s recent rally.

On Friday, the Philippine Stock Exchange index (PSEi) fell by 0.13% or 8.92 points to close at 6,873.23, while the broader all shares index went down by 0.1% or 3.88 points to finish at 3,597.67.

Meanwhile, week on week, the PSEi increased by 0.34% or 23.07 points from its 6,850.16 close on Feb. 8.

“The local bourse sustained its upward momentum, gradually approaching 7,000, following the Bangko Sentral ng Pilipinas’ (BSP) status quo on rates,” online brokerage firm 2TradeAsia.com said in a market note.

Last week, the BSP’s policy-setting Monetary Board kept the policy rate at a 16-year high of 6.5% for a third straight meeting, as expected by 15 of 17 analysts in a BusinessWorld poll. Interest rates on the overnight deposit and lending facilities were also left unchanged at 6% and 7%, respectively.

For this week, the market could decline as investors pocket their profits, Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

“With its four-week rally, the local market is seen to be susceptible to profit-taking. Hence, [this] week, investors are expected to be on the lookout for fresh leads that can provide support to the bullish sentiment,” Mr. Tantiangco said.

“Investors are expected to wait for 2023 corporate results reports. Investors may also look to Wall Street to see if it will continue with its record performances,” he added.

China Bank Capital Corp. Managing Director Juan Paolo E. Colet said the PSEi may continue consolidating at 6,750 to 6,950.

“The local market may see more selling pressure emerge this week as it tries to surmount the 6,900 level. Hotter than expected US January producer prices and a potential delay in US policy rate cuts may give investors reason to take profits. Nonetheless, resilient buying appetite could provide market support especially if we see sustained net foreign inflows,” he said in a Viber message.

The producer price index (PPI) for final demand rose 0.3% last month, the largest increase since August 2023, after declining by a revised 0.1% in December, the Labor department’s Bureau of Labor Statistics said, Reuters reported. Economists polled by Reuters had forecast the PPI gaining 0.1% following a previously reported 0.2% drop.

In the 12 months through January, the PPI increased 0.9% after climbing 1% in December.

Meanwhile, Mr. Tantiangco put the PSEi’s major support at 6,700 and major resistance at 7,000.

2TradeAsia.com placed that the index’s immediate support at 6,700-6,800 and resistance at 7,000.

“Turnover has remained thin. Compelling earnings results and more data points supporting sunnier macro fundamentals are needed to push cold money into deployment,” the online brokerage added. — RMDO with Reuters