The local stock market is seen to continue consolidating at current levels although sentiment appears to be more bullish with the PSEi rising 1.55 percent in the first trading week of the new year.

“The market has been able to maintain its position above the 6,600 level (a previous resistance) and its 200-day exponential moving average,” noted Philstocks Financial Research Manager Japhet Tantiangco.

Online brokerage firm 2TradeAsia.com said “The main index's primary technical challenge is in the 6,800-7,000 zone where last year’s fourth quarter rally hit a dead end.”

“The key is to understand that the PSEi must build a base from here in order to amass enough escape velocity to trade back to 7,500 plus levels. Fundamental drivers are also looking to be much more forgiving than those in the first half of 2022-as such, the index's consolidation may open opportunities to accumulate while stronger catalyst develop,” it added.

Tantiangco said that, “Next week, the local market could move sideways as investors weigh local economic growth prospects against inflation and interest rate concerns.”

“Our latest labor force survey could become a point of contention. While our jobs data reflect a strong local economy, they also show a tightening of the labor market which could lead to stronger aggregate spending and consequently, demand side inflationary pressures. This in turn may lead to more policy rate hikes by the Bangko Sentral ng Pilipinas,” he added.

2TradeAsia.com said that, “While underemplovment can be improved, a stable labor market should help allay fears that any recession over the medium term will not be as pervasive.”

“Aside from these, worries over the further tightening of the Federal Reserve and its impact on the US economy may also weigh on market sentiment. Next week, investors may also watch out for our upcoming foreign trade and direct investments data,” said Tantiangco.

For stock picks, Regina Capital Development Corporation is rating Cebu Air a BUY noting that it is benefitting from less stringent travel restrictions and the recovery in its passenger volume and ancillary revenues. Its cargo revenue has also sustained its double-digit growth.

However, the carrier’s prospects also faces risks from unfavorable forex fluctuations, rising jet fuel cost, and its highly leveraged position.

Abacus Securities Corporation believes Semirara would still be a viable dividend play this year, as its estimates imply that the company should pay out a regular cash dividend of at least P2.06 per share by April.

“While we cannot say for sure until when coal prices could maintain its uptrend, we expect spot prices to remain elevated in the medium term... This should be positive for power generators with high exposure to spot such as SCC and AP, and especially for the former if its plants perform reliably this year,” it noted.

Abacus also favors Nickel Asia in light of the sustained rise in nickel prices in the last four years.

While the firm’s stock price has lagged behind due to the steady decline in ore volumes since 2020, the brokerage said that, “if the company can turn around its volume decline, NIKL might be a good stock to own in 2023.”