By means of Heroes Joy Talavera Reporter
THE MAIN INDEX could retest the 7,400 mark this week as the market awaits the Bangko Sentral ng Pilipinas (BSP) policy meeting on Wednesday, with a rate cut expected to boost sentiment.
On Friday, the main Philippine Stock Exchange index (PSEi) fell 1.36% or 101.15 points to close at 7,310.32, while the broader all-stock index lost 0.55% or 22.36 points to close at 4,015 ,16.
Week on week, the PSEi fell 2.11% or 157.60 points from the October 4 reading of 7,467.92.
“Last week there were negative developments on the local stock exchange. After five consecutive weeks of rally, the market retreated, giving up its position at the 7,400-7,500 price. Trading has weakened as evidenced by declining value turnover and foreigners have become net sellers over the past three trading days,” Japhet Louis O. Tantiangco, senior research analyst at Philstocks Financial, Inc., said in a Viber message.
This week, the market could recover from the bargain hunting before the BSP revision, he said.
“If an interest rate cut is implemented, this could give the market a boost. Investors are also expected to watch for clues on the BSP’s policy prospects. If there were hints of more policy easing, it is expected to boost optimism among investors,” Mr Tantiangco said.
“We could see a revival of selling pressure on Wednesday as investors await the BSP’s policy decision… We believe markets will be closely watching how the recent positive inflation surprise and rising geopolitical tensions in the Middle East will play a role in the policy decision and guidance of the BSP. Rastine Mackie D. Mercado, research director at Chinese bank Securities Corp., said in an email.
A Business world A poll conducted last week showed that 16 out of 19 analysts expect the Monetary Board to cut the benchmark interest rate by 25 basis points for a second straight meeting during its policy review on October 16 (Wednesday). This would bring the policy rate from the current 6.25% to 6%.
Jayniel Carl S. Manuel, an equities trader at Seedbox Securities, Inc., said sentiment this week could be mixed “as both technical and fundamental factors come into play.”
“On the technical front, the PSEi has recently retreated from a peak of almost 7,415, now around 7,310, down 1.36%. This decline indicates that the index may enter a consolidation phase or face further downward pressure,” he said.
Mr. Mercado placed the PSEi’s support at 7,100 and resistance at 7,550-7,600.
“The market could retest the 7,400-7,500 range. If it manages to move back to this area, it will be considered its support, while resistance would be at 7,700. However, if it fails, this will be its resistance while support would be at 7,150,” Mr Tantiangco said. “The main downside risks for the market are the movement of our currency and tensions in the Middle East.”