Market susceptible to profit taking this week

The local bourse is seen to be prone to profit taking this week following its strong performance in the previous trading week, an analyst said.

The benchmark Philippine Stock Exchange index (PSEi) rose 2.2 percent or 139.43 points to finish at its intraday high of 6,484.06 on Friday.

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The last time the market finished at this level was last June 11 when it closed at 6,476.24.

Philstocks Financial Inc. senior research analyst Japhet Tantiangco said the market is currently in overbought territory after its strong rally last week, which improved its position by 9.93 percent week-on-week.

He said this makes the market susceptible to profit taking and might cause the index to pull back in this week’s trading.

Despite this, Tantiangco said the local bourse might still hold its ground at the 6,000 to 6,100 support range anchored by optimism from further easing of quarantine restrictions in a bid to slowly reopen the economy.

He added investors can also anticipate upcoming economic data for further cues including the country’s September money supply and bank lending data, and third quarter and nine-month corporate earnings report to be released.

Tantiangco sees local shares’ resistance at 6,600.

Meanwhile, he also noted factors that could negatively impact the PSEi such as the possible rise in coronavirus disease 2019 (Covid-19) cases and weak US market results.

“Downside risks to the market, however, includes the possible reacceleration in the daily increase of Covid-19 cases, and negative spillovers from overseas markets primarily from Wall Street, which could come about if no deal or progress is made from the US fiscal stimulus talks,” Tantiangco explained.

This article was originally published by Manila Times

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