Stockbroker Colfinancial.com said the seasonal late-year Santa Claus rally can push the Philippine Stock Exchange index (PSEi) to close at 7,400.
The PSEi currently stands at 7,297.66.
Colfinancial.com said this is more likely after the sell-off in November due to the coronavirus Omicron variant scare that dragged the PSEi from the 7,400 level to 7,100.
“Fears of the Omicron variant served as a catalyst for investors to take profits, which consequently pulled the PSEi down below the 7,000 levels before subsequently rallying.
Note that PSEi was also trading at over-extended conditions after rising from 6,200 to 7,400 in just a couple of months,” Colfinancial.com said.
Colfinancial.com said the Omicron variant scare provided a much-needed breather for the index, allowing investors to take some money off the table to lock in some profits and “allowed new investors to take a position at cheaper levels.”
“This sell-off helped a potentially exhausted market, setting up the perfect winter storm for the Santa Claus rally,” it said.
“Additionally, Omicron fears may have been over exaggerated with initial data showing that the new variant may be less lethal than its predecessors and that vaccines work in protecting people against the variant,” it added.
Colfinancial.com said stocks sold during the scare will potentially benefit from the Santa Claus rally, particularly since many individual stocks showed strong bounces from key support levels following the sell-off.
“With the Omicron fears subsiding, we expect the prices of these individual index stocks to continue to recover, which should result in the Santa Claus rally to end the year. Investors can look to accumulate some of the stocks listed below to participate on the market phenomenon towards the end of the year,” it said.
“Investors can look to participate in large cap PSEi stocks that were sold-off during the Omicron driven market correction,” it added. – Ruelle Castro
