By Sheldeen Joy Talavera, A reporter
The MAJOR INDEX may 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 bellwether Philippine Stock Exchange (PSEi) index fell 1.36% or 101.15 points to end at 7,310.32, while the broader index of all shares shed 0.55% or 22.36 points to close at 4,015.16.
Week by week, the PSEi fell by 2.11% or 157.60 points from its close of 7,467.92 on Oct. 4.
“Last week there was a bad development in local football. After five straight weeks of rallying, the market retreated, leaving its position in the 7,400-7,500 range in the process. Trading has slowed down as reflected in the drop in prices and foreigners have become sellers in the last three days,” said Japhet Louis O. Tantiangco, senior research analyst at Philstocks Financial, Inc., in a Viber message.
This week, the market may return to profit hunting ahead of the BSP review, he said.
“The rate cut, if delivered, could give the market a boost. Investors are also expected to watch for clues about the BSP’s policy outlook. If there are no ideas to weaken the policy, it is expected to inspire confidence in investors,” said Mr. Tantiangco.
“We may see some selling pressure on Wednesday as investors await the BSP’s policy decision…” Rastine Mackie D. Mercado, director of research at China Securities Corp., said in an email.
A BusinessWorld a survey conducted last week showed that 16 of 19 analysts expect the Federal Reserve to cut interest rates by 25 basis points for the second consecutive meeting at its policy review on Oct. 16 (Wednesday). This will bring the policy rate to 6% from 6.25%.
Jayniel Carl S. Manuel, an equity trader at Seedbox Securities, Inc., said sentiment could be mixed this week “as technical and fundamental factors emerge.”
“On the technical front, the PSEi recently fell after rising to 7,415, now sitting around 7,310, down 1.36%. This decline suggests that the index may enter a consolidation phase or face further pressure,” he said.
Mr. Mercado placed PSEi support at 7,100 and resistance at 7,550-7,600.
“The market may revise the 7,400-7,500 range. If it is able to return to this area, then this will be considered as its support while the resistance will be at 7,700. If it fails, however, this will be its resistance and the support will be at 7,150,” said Mr. Tantiangco. “The key risks seen in the market are our currency flows and tensions in the Middle East.”
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