The locals stock market is expected to see some profit-taking this week after five straight days of gains last week but sentiment may still be swayed by the release of some economic data.
“The market may test the validity of its breach of the 6,600 level. Given the market’s rally last week, we may see episodes of decline this week driven by profit taking,” said Philstocks Financial Research Manager Japhet Tantiangco.
He noted though that, “Still, expectations that the Federal Reserve may end its monetary tightening soon following the improvements in the US’ inflation situation may continue to fuel positive sentiment.”
China Bank Capital Managing Director Juan Paolo Colet said “Some traders are expected to take profits given the good run-up in stock prices, but we are also likely to see investors buy the dips as they position ahead of President Ferdinand Marcos Jr.’s State of the Nation Address and the US Federal Reserve’s policy rate announcement later this month.”
“Momentum should be aided by upcoming second quarter earnings results, of which we expect year-on-year better (but sequentially worse) core earnings,” said online brokerage firm 2Tradeasia.com.
Tantiangco said “Investors may also look forward to more factors that could serve as catalysts to the market. This may include our OFW cash remittance data and our balance of payment position to be released next week.”
While expecting the market to consolidate this week, Colet said “It is also important to keep a close eye on foreign fund flows, as sustained net foreign buying would be crucial for the market’s strength.”
“We maintain that accumulating bruised up shares can provide significant excess returns (especially those carrying cash flow positive 2024 stories),” added 2Tradeasia.com.
For stock picks, Abacus Securities Corporation noted that CREIT and Alternergy’s share prices are likely to rally further following news that they got awards from the Energy Department's second Green Energy Auction Program.
Citicore Renewable, which will need to lease more land from CREIT, got 916.6 MW while Alternergy won 140 MW.
Meanwhile, COL Financial has a BUY rating for D&L Industries which recently started commercial operations for its new plant in Batangas. The plant has moved into a soft-opening status with several production lines already up and running, and full commercial operations are expected in the next couple of months.
“The significant capacity expansion from the new plant will allow DNL to scale its food and non-food segments, addressing capacity bottlenecks seen prior to the pandemic,” said COL.
It added that, “As the Batangas plant will house primarily high margin specialty products, it will also enable DNL to meet the growing overseas interest for high value-added coconut based products – a key driver of its export business.”
Abacus noted that, while “clients will have to wait patiently for the benefits of the new plant to be felt, but we believe it will be significant as management also confirmed it will produce higher margin products.”