Investors are likely to cash in for profits as the market would undergo a correction after last week’s gains.

BPI Securites noted that the market has been treading lightly for much of last week following the steep rise on Monday. “Monday's gains were enough to lift the market higher by about 164 points.”
Volumes have been pretty robust, indicative of the level of liquidity in the system. BPI sees a correction given that the market is treading at near the highs for the year.

AB Capital Securities also expects a market correction following the strong run up for the past seven months.

“With the market PE at 17x, it is already quite expensive with very little growth drivers for corporate earnings,” says AB Capital.

“The PSEi had already hit our ascending triangle target of 2,890 and it would be healthier for the market to take a pause. The main index completed a five wave Elliot wave cycle earlier this month and seemed headed for a much needed correction.”

AB Capital, however, noted that the positive economic data provided another lease in life for the market, which briefly breached the 2,900 psychological resistance.

“The PSEi has whipsawed back below the resistance levels last Friday with little major drivers to push it up further. Key driver for the market in the coming sessions could be the release of a record low August inflation and some key developments abroad. Trading range for the PSEi is between 2,700 to 2,900.”

The equities market had one of its best performances last week as strong economic data provided a positive backdrop for investors, says AB Capital.

“Interest in the market was very strong as pent up buying provided a positive spring board for the market to start the last trading week of August. Coming from a shortened trading week, market participants failed to respond to the global markets' strong run up in the prior week.”

“This created a lot of buying orders at the start of the week, resulting to the local market's best single day performance of the year. The PSEi surged by 139 points or 5.11 percent on Monday alone,” says AB Capital.