STOCKS recovered on Tuesday amid favorable developments in the local scene, and investors shrugging off the December 2019 inflation data, which was the fastest since June 2019.

The 30-member Philippine Stock Exchange index (PSEi) gained 42.83 points or 0.54% to close at 7,840.70, while the broader all shares index climbed 15.02 points or 0.32% to end at 4,648.35.

“The local market made gains today and this is first due to the signing of the 2020 national budget. With the record high budget signed on time compared to last year, fiscal policies are expected to be more helpful this 2020 in fueling economic growth which in turn would boost the market,” Japhet Louis O. Tantiangco, senior research analyst at Philstocks Financial Inc. said in a text message on Tuesday.

Mr. Tantiangco also noted optimism after the government through Presidential Spokesperson Salvador S. Panelo announced on Tuesday its offer to water concessionaires of a new contract that will replace the existing deals that “rip off” consumers. If water concessionaires refuse, Mr. Duterte will order the cancellation of existing contracts and the nationalization of water services.

“Hopes were revived for the water concessionaires after the government announced that it will provide new contracts,” he said, noting that Manila Water Co., Inc. gained 12.29% to end at P10.78 apiece, while companies related to water firms like Ayala Corp., Metro Pacific Investments Corp., and DMCI Holdings, Inc. also increased by 0.11%, 4.01%, and 4.33%, respectively.

PNB Securities, Inc. President Manuel Antonio G. Lisbona said investors shrugged off the December 2019 inflation print of 2.5%, up from previous month’s 1.3%, but down from 5.1% in December 2018, which brought full-year average to 2.5%, well within the government’s target range of 2-4% for 2019.

“Our economist expects inflation to move towards the higher end of the BSP’s target range by the third quarter of the year,” Mr. Lisbona noted.

“In the meantime, the market will still remain range-bound with resistance found at 7,900-8,000. Given local inflation pressures and uncertainty surrounding the effects of the conflict between the US and Iran,” he added.

Back home, sub-sectors were divided. Gainers were led by holding firms, which gained 101.44 points or 1.33% to close at 7,728.51. Industrials gained 76.14 points or 0.79% to end at 9,666.54; and services gained 4.92 points or 0.31% to 1,548.

Meanwhile, mining and oil fell 45.49 points or 0.56% to 8,002.67; financials dropped 4.36 points or 0.23% to 1,830.87; and property declined 6.42 points or 0.15% to 4,116.63.

Stocks that gained outnumbered those that fell, 94 to 85, while 64 issues were unchanged.

Some 2.19 billion issues valued at P6.49 billion switched hands on Tuesday, up from previous session’s 664.04 million issues worth P4.10 billion. Net selling on Tuesday was at P492.57 million, up from the previous session’s net outflows worth P303.30 million. — Vincent Mariel P. Galang