THE Philippine Stock Exchange index (PSEi) could return to the 8,000 level this week should third-quarter earnings reports shore up confidence.

The main index put an end to two straight days of gains on Friday when it closed at 7,885.23, losing 45.32 points or 0.57% from Thursday. But on a weekly basis, the PSEi was up 0.45%, marking the second straight weekly gain.

Value turnover for the week stood at P25.08 billion, down from P36.54 billion the week prior due to thin trading volume.

AAA Southeast Equities, Inc. Research Head Christopher John Mangun noted last week’s trading volume was the lowest since April, when the market was closed for two days due to the Holy Week.

“The investor sentiment remains very cautious which hindered investors from coming into this market despite the massive gains in the previous week. The sentiment abroad may have improved after the phase 1 deal between China and the United States, but it has done very little for local and foreign investors trading here in the Philippines,” he said in a market report sent Sunday.

He noted that investors abroad accounted for bulk of trading, ending last week with P1.39 billion in net foreign buying.

For the week ahead, Mr. Mangun said there is a possibility for the bourse to break beyond 8,000, but it may also test support at 7,750.

“Considering the current market sentiment, we are going to see the latter scenario take place. Investors are just not convinced that the market can go higher,” he said.

But with listed firms expected to start reporting third-quarter earnings, not all hope is lost.

Philstocks Financial, Inc. Research Associate Claire T. Alviar said earnings reports could drive investors back to the market. “The local bourse may test the 8,000 resistance backed by the anticipation of third-quarter earnings. However, given the weak rally this week — as most volumes were lower than the 20-day moving average — investors may need strong catalyst like actual better third-quarter results, to breach the said resistance and hold above it,” she said in a text message Saturday.

Regina Capital Development Corp. Head of Sales Luis A. Limlingan also sees resistance at 8,000, saying the “market will probably still be making adjustments post FTSE rebalancing and specific issues may move depending on whether their earnings are released.”

Mr. Mangun said that despite expectations of better earnings results in the third quarter due to slower inflation and recent capital injections to, investors will remain hinged on sentiments rather than fundamentals.

“Even if we see the index rally above 8,000, this will be short-lived as selling pressure builds up every time we have seen it go above that level in the last few months. It may be more beneficial for the market to remain near its stronger support levels rather than these minor rallies that we have been seeing,” he said. — Denise A. Valdez

RELATED ARTICLESMORE FROM AUTHOR