By Denise A. Valdez

THE MAIN INDEX is seen to keep rising this week, driven by earnings reports from listed banks which analysts expect to have seen gains in the third quarter.

The benchmark Philippine Stock Exchange index (PSEi) closed flat on Friday, inching down 8.05 points or 0.1% to 8,065.76 at the end of last week’s trading.

However, on a weekly basis, it was still 0.69% higher at 8,065.76, as last week also saw a record-breaking performance from the main index when it closed at 8,216.68 on Tuesday — its best finish since July.

Trading volume improved last week to P33.96 billion from the previous week’s P26.26 billion, but offshore investors trimmed their net purchases to P722 million from P1.75 billion in the week prior.

Heading into a new week, AAA Southeast Equities, Inc. Research Head Christopher John Mangun said there is a “strong possibility” that the PSEi will keep moving up, driven by fund inflows from foreign investors.

“We may see it build momentum and trade in a new range… Once investors realize how well our economy has performed and start looking at fundamentals again, we will see investors flood back into this market and take it to new highs,” he said in a market note sent Sunday.

“We are looking to the financials sector to lead the rally as banks will continue to post enormous growth due to rate cuts from the central bank,” he added.

After last week’s positive reports on the easing of October inflation to 0.8% and the robust economic expansion in the third quarter, with gross domestic product growth at 6.2%, analysts are hopeful investors will keep the market’s momentum.

But Diversified Securities, Inc. Equity Trader Aniceto K. Pangan said the market may consolidate from 7,800 to 8,200 as it continues to be “saddled with a lot of offerings.”

He said in a text message he expects this week’s drivers to be “still the developments in the US-China trade negotiation, earnings report of local companies, economic stimulus announcements in China as well as in Europe, & MSCI rebalancing of local companies.”

Next week will also be the last for listed firms to report third-quarter earnings, with the deadline set on Nov. 15.

Mr. Mangun said it is important to watch what happens in the next few weeks as it will determine whether there will be a “Christmas rally” at the local bourse towards the end of the year.

“The main index has traded sideways since the beginning of the year, building momentum for a bigger move. We are still convinced that it is going to be a move higher in the long term despite all the gloom and doom that we are seeing abroad,” he said.