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'Reason to take profits' could pull down market

BACK TO NORMAL A general view of the Philippine Stock Exchange (PSE) Building from the Bonifacio Global City in Taguig City. The PSE announced that trading will return to its regular hours starting next month after shortening its schedule previously due to the resurgence of Covid-19.

'Reason to take profits' could pull down market

INVESTORS could this week choose to lock in gains made during prior rallies, analysts said, causing the stock market to reverse a monthlong upward trend.

The 30-company Philippine Stock Exchange index (PSEi), which has remained bullishly biased for four consecutive weeks, ended 0.34 percent higher week-on-week at 6,873.23 last Friday.

"With its four-week rally, the local market is seen to be susceptible to profit-taking," Philstocks Financial Inc. senior research analyst Japhet Tantiangco said.

Traders will likely look for positive catalysts to fuel bullish sentiment as without these stocks may see profit-taking, resulting in a pullback for the bourse.

For China Bank Capital Corp. Managing Director Juan Paolo Colet, hotter-than-expected US January producer prices and expectations of a possible delay in policy easing "may give investors reason to take profits."

"Nonetheless, a resilient buying appetite could provide market support, especially if we see sustained net foreign inflows," he continued, adding that investors will likely take direction from US and Chinese markets.

Tantiangco and Colet both said that markets would also continue waiting for the release of a slew of corporate earnings reports both here and abroad.

"Investors may also look to Wall Street to see if it will continue with its record performances," the Philstocks analyst added.

Online brokerage, meanwhile, said a retest of the "critical" 7,000 level was likely and stressed that this could be the "PSEi's biggest acid test for the first quarter, with selling pressure looking strong at this level."

"Turnover has remained thin; compelling earnings results [plus] more data points supporting sunnier macro-fundamentals are needed to push cold money into deployment," it added.

Last week, net value turnover averaged P4.42 billion per day, slightly lower than the year-to-date average of P4.58 billion.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said that upcoming Philippine economic data likely to factor in the bourse' performance would be January balance of payments figures due today, while the minutes from the previous Federal Reserve meeting would be the focus in the US.

Chart-wise, the stock market's support is seen between 6,700 and 6,800, while its resistance is expected to be at 7,000.

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