By Denise A. Valdez, Senior Reporter

LOCAL SHARES are expected to move sideways this week as some investors may start bargain hunting after last week’s four-day decline.

The benchmark Philippine Stock Exchange index (PSEi) closed Friday’s session at 6,791.46, down by 136.29 points or 1.96% against the previous day.

On a weekly basis, the index was lower by 378.33 points or 5.28%, reversing the uptrend it recorded for three consecutive weeks.

Value turnover grew 58% to an average of P16.42 billion, while net foreign selling expanded 162% to an average of P1.56 billion.

“Profit taking dominated following consecutive sessions of strength. The PSEi failed to hold the 7,000 level, plunging 378 points to 6,791,” online brokerage 2TradeAsia.com said in a market note.

The market has been on an uptrend since the start of November due to improved third-quarter corporate earnings and a string of positive news on the coronavirus disease 2019 (COVID-19) vaccine.

However, strong selling pressure pushed the PSEi to correct last week, which led the market to break below its 10-day exponential moving average, Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said.

“(This) trading week, we may see sideways movement from the market. Investors may hunt for bargains from last week’s sell off,” Mr. Tantiangco said in a text message.

Aside from bargain hunting, investors may also turn bullish if there will be positive developments on coronavirus vaccine candidates. Another catalyst is the upcoming November manufacturing data, which is expected to come out this week.

“Improvement in our manufacturing data could provide boost to market sentiment,” Mr. Tantiangco said.

Investors may also react to the passage of the corporate tax reform bill, Senate Bill No. 1357 or the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE).

“The CREATE bill… will be a primary point of discussion for 2021, especially for the next earnings reporting seasons,” 2TradeAsia.com said.

Among the bill’s salient points, based on the brokerage’s analysis, are the reduced corporate income tax, as this will help pad earnings recovery, and the net operating loss carry-over extension, which will assist small and medium enterprises.

“Truly, there is no such thing as free lunch, but the CREATE bill, in general, will put the Philippines on par with ASEAN economies in taxation — a plus in the long run,” 2TradeAsia.com said.

Other developments that will help improve sentiment are the passage of the P4.25-trillion national budget for next year and news that the government is preparing for COVID-19 vaccinations by as early as the second half of 2021.

The brokerage set the immediate support for the PSEi at 6,650 and resistance at 7,000, while Mr. Tantiangco put support at 6,600 and resistance at 7,150.

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