Concern over the surge in COVID cases will be foremost in the minds of stock market investors this week, although the government is also set to release data on remittances and balance of payments.

“While we may see some bargain hunting in the early part of this week following last Friday’s steep drop, investors are still expected to take a cautious stance in light of our COVID-19 situation,” said Philstocks Financial Senior Supervisor for Research Japhet Tantiangco.

He noted that, “If the daily new case counts remain elevated, it will raise expectations of the extension of the strict quarantine measures implemented in the country, primarily in the National Capital Region.”

If this happens, Tantiangco said “the market may still close next week in the negative territory. Extension of the strict social restrictions are expected to lead to more economic losses for the present period, and more scarring for our economic prospects.”

Online brokerage 2TradeAsia.com said the continuously rising Delta variant cases makes the case of an extension very likely, at least until the COVID-19 curve suddenly reverses for the better.

“As headlines of localized lockdown extensions trickle, in brace for volatility in shares tied to certain areas (such as those with Metro Manila-heavy operations) and those that will be affected by cancellations of flights and leisure-allied industries,” it noted.

It added that, “The likelihood of the index retesting 6,200 support level, a crucial pitstop over the past 6 months, remains high, especially in the face of possible quarantine extensions in areas near the capital.”

The online brokerage noted though that “part of this week's downturn can be attributed to funds being compelled to follow PSEi's rebalancing; this explains the deep Market-On-Close selloff, which may naturally correct itself early in upcoming sessions.”

Meanwhile, Tantiangco said investors may also watch out for the upcoming June 2021 OFW remittance data and July 2021 Balance of Payment figures which will be released this week.

He warned though that, chartwise, the market’s 50-day exponential moving average has already crossed below its 200-day counterpart, forming a Death Cross, which is a bearish signal, implying a possible downtrend moving forward.”

BDO Chief Market Strategist Jonathan Ravelas said “last week’s close at 6,320.19 still implies further consolidation within the 6,300 to 6,700 levels in the near-term. However, a sustained break below the 6,300 levels will put the 5,700 to 6,000 levels at risk.”

Following last week’s deluge of earnings reports, top online brokerage firm COL Financial is maintaining its BUY rating for Ayala Corporation.

“The current state of the pandemic still presents much uncertainty, but we believe AC has adjusted nicely and will be able to navigate through this challenging time,” it noted.

Abacus Securities Corporation also favors AC because it is “trading at significant discounts to its closest peers and to its own historical valuations.” Both COL and Abacus are also recommentdign D&L Industries.

“We like DNL given that it continues to be in prime position to capitalize on the recovery of the economy given its diversified portfolio of products catering to different consumer groups,” said COL.

It added that, “The company is relatively resilient to rising input costs thanks to its large portfolio of high margin specialty products. DNL is also a beneficiary of the growing popularity of health, wellness, and sanitation trends brought about by the pandemic.”

For its part, Abacus said “We believe DNL will be able to surpass 2019 net income levels as we approach the second half, including the holiday peak.” COL also has a BUY rating for Eagle Cement Corporation after an upgrade in its fair value estimate.

“We remain optimistic on the construction industry’s recovery and consequently the improvement in cement demand this year. Moreover, we continue to like EAGLE because of its superior margins, strong balance sheet position, and capacity expansions,” COL said.

Both brokerages are also upbeat on DMCI Holdings after both upgraded the firm’s earnings estimates following its strong first half performance.

Abacus said DMC’s core income grew 217 percent year-on-year and is already 72 percent of consensus.

It also pointed out that, “Since DMC’s decline is just due to flows and not fundamentals, we believe this presents a trading opportunity.”