Monday, February 6, 2012

PSEi Starting a Strong Week: February 6, 2012

PSEi edged higher today closing at 4,816.33, 1.21% or 57.76 points higher from Friday's close. The benchmark index very strong reaching a high of 4,855.00 but eventually gave in to early profit takers. The Financials sub-index lead its gain today at 3.23% with SECB, PSE, and MBT gaining 6.40%, 5.79%, and 5.10% respectively. The rally was probably driven by high investor confidence due to lower interest rates and improving risk appetite of international investors. Another proof that risk appetite is improving is the significant increase in foreign buying of Philippine stocks. For the month of January, net foreign buying reached Php 16B vs. the monthly average of Php 4.8B in 2011.  

Most active stocks for the day were BDO (up 0.82%, Php 601M), SM (up 0.61%, Php 426M), and JGS ( unchanged, Php 415M). On the other hand, despite the rally, URC, PX, and JFC ended the day in red declining by 3.12 %, 1.95%, and 1%. 

The market's movement suggest that bulls are still strong. For the month of January, the Philippine index was up 7.1% outperforming regional peers namely Indonesia, Thailand, and Malaysia. At this rate, it is probable that our market would reach correction soon. There's a possibility that some would already or soon reach their profit targets already and might already do so. As a domino effect, other investors would also be probably locking up their gains if this happens. But who knows, if the foreign funds demand would prove to be superior than these both local and international profit takers, we might see a different story.

I still suggest to be on the look out, do not panic if the market goes down but instead use this in your advantage. Happy Trading!