Securities enterprises predicted profit takers would continue to step into the playground as the sentiment turned cautious and the market impact of good inflation numbers appeared to be lessening last week.
The markets closed the week mixed with the southern bourse losing ground towards the end of the session while the northern bourse bounced back in the final minutes despite earlier volatility. The VN Index continued to erase 1.36 points to close at 465.7 while the HNX-Index closed at 77.75.
HCM City Securities Corp. (HSC) said the current rally peak for high beta stocks may be upon the market and that it is time to start taking some profit off the table over the next few weeks.
Interest rates and year-on-year CPI (consumer price index) have fallen very sharply already in the past few months and much of this is already priced into these stocks. While interest rates and CPI will not bottom out until August or so, the rate of decline will start to taper off from next month. Hence, the first phase liquidity-driven rally may be in its final stretch already while the more fundamental-driven second phase rally is some time ahead, HSC said.
“Then from a technical point of view, we note that we are in a flag pattern for many of the high beta stocks, suggesting that pressure seems to be building. Of course, none of this is conclusive yet and simply some may be regarded as early warning signals. But with the April-May long holiday weekend coming up and the June-July seasonal quiet period beckoning, we are getting a bit twitchy here on fundamentals, liquidity news cycle and technical grounds,” it explained.
“This view only applies to high beta stocks such as banks, brokers and selected real estate stocks in our opinion and does not apply to either blue-chips or laggard stocks. It is also a fairly short-term view, one to two month view, and does not apply to medium or long- term holders,” the broker added.
Viet Capital Securities Co., meanwhile, maintained a reserved view in regards to real estate when interest rates are at such high levels to combat accelerated inflation.
“We are thus only confident in the few names that could convince us of their liquidity and less-than-average amount of debt,” it said.