The Philippine Stock Exchange index (PSEi) is poised to extend streak of bargain-hunting as investors weigh the prospect of further interest rate cuts against critical economic data due for release this week.

Optimism is building around expectations of stronger corporate earnings and pivot in monetary policy, though analysts warned that trading may remain volatile. Market participants are shifting their focus to upcoming inflation and labor market reports, which will serve as a barometer for the health of household consumption—a primary engine of the local economy.

Japhet Tantiangco, research manager at Philstocks Financial, said that while the market is recovering from a year characterized by tepid trading and heavy net foreign selling, the current valuation provides a window for accumulation.

He noted that despite lingering concerns regarding the broader economy’s performance, the PSEi has successfully defended the 6,000 psychological level.

Technically, the market is exhibiting a bullish bias as it attempts to sustain an uptrend that began in late November. Tantiangco expects the index to test the 6,150 resistance line in the immediate term.

However, the path higher may be met with increased friction. Rastine Mercado, research director at Chinabank Securities Corp., indicated that while momentum from the previous week could carry over, selling pressure is likely to intensify between the 6,150 and 6,220 levels.

A breakout above this range, supported by higher trading volumes, could clear the way for a move toward 6,300.

The outlook is further bolstered by a shifting narrative on inflation. Analysts at 2TradeAsia.com suggested that while domestic sentiment remains fragile following fourth-quarter headwinds, the convergence of stabilizing prices and an aggressive monetary easing cycle indicates that local assets are at a structural inflection point.

The brokerage noted that even if “muddle-through” price action persists in the short term, the fundamental setup for a recovery in 2026 is now firmly established.

As New Year allocations begin, investment houses are advising clients to build positions in high-quality stocks that have been discounted by macroeconomic noise. Investors are also expected to keep a close watch on the volatility of the peso, which remains a key factor in foreign fund flows.

If upcoming data confirms a cooling inflation trend, it would provide the Bangko Sentral ng Pilipinas with additional room to lower borrowing costs, further enhancing the appeal of Philippine equities.