Stocks drop on profit taking, lack of fresh leads

Philippine stocks closed in the red on Monday as local investors opted to pocket their gains from the market’s recent rally amid a lack of positive catalysts.   

The benchmark Philippine Stock Exchange index (PSEi) dropped by 28.26 points or 0.45% to end at 6,183.63 while the broader all shares index fell by 19.45 points or 0.58% to close at 3,305.32. 

Local shares ended in negative territory on Monday as traders “seized the opportunity to lock in profits following the market’s runup since the beginning of November,” AB Capital Securities, Inc. Vice-President Jovis L. Vistan said in a Viber message.

“The susceptibility to profit-taking was heightened by the recent rally’s insufficient volume for it to sustain its upward momentum. On a fundamental basis, the prospect of a potential peak in both inflation and interest rates may indicate the groundwork for a near-term market bottom,” Mr. Vistan added.

The Bangko Sentral ng Pilipinas (BSP) is likely done hiking rates this year, with analysts expecting a pause in their policy meeting next month amid easing inflation.

The Monetary Board is expected to keep its policy rate at a 16-year high of 6.5% at their Dec. 14 meeting, the last review for the year, analysts said.

The BSP kept its key policy rate unchanged at its Nov. 16 meeting, following the 25-basis-point off-cycle rate hike on Oct. 26.   

Inflation fell to a three-month low of 4.9% in October from 6.1% in September and 7.7% in the same month a year ago. Still, inflation went above the BSP’s 2-4% target band for the 19^th straight month.

Year to date, inflation stood at 6.4%.

The lack of trading drivers caused the market to decline, Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message.

The majority of sectoral indices closed lower on Monday. Holdings firm went down by 69.35 points or 1.15% to 5,941.65; financials declined by 16.68 points or 0.95% to 1,733.88; mining and oil retreated by 60.77 points or 0.63% to 9,450.90; and industrials decreased by 7.10 points or 0.08% to 8,677.69. 

Meanwhile, services climbed by 6.25 points or 0.42% to 1,493.41 and property rose by 1.92 points or 0.07% to end at 2,659.20.

Value turnover reached PHP 3.73 billion on Monday with 690.86 million issues changing hands, lower than the PHP 4.93 billion with 461.72 million issues recorded on Friday.

Decliners outnumbered advancers, 119 versus 66, while 42 names closed unchanged.

Net foreign selling rose to PHP 105.9 million on Monday from PHP 61.66 million on Friday.

“With the downside risk considered limited, support is seen around the 6,100 level, while immediate resistance is at 6,300,” Mr. Vistan said. — Revin Mikhael D. Ochave