Market expected to move in a narrow range this week

February 06, 2023 - 08:15
The market needs a period of accumulation in a narrow range to create a solid foundation before a new uptrend can be created.
A trader watches the market's movements at a stock exchange. Photo

HÀ NỘI — The Vietnamese stock market struggled following the Tết holiday, but liquidity improved as selling pressure increased, reflecting investors' desire for profit-taking. However, experts remain positive about the market's development in the future.

The market benchmark VN-Index on the Hồ Chí Minh Stock Exchange (HoSE) ended last week at 1,077.15 points, while the HNX-Index on the Hà Nội Stock Exchange (HNX) was at 215.28 points.

For the week, both indices recorded a weekly loss, with the former losing 3.6 per cent and the latter down 2.5 per cent.

Trading value on the main exchange HoSE increased by 23.1 per cent compared to the previous five trading sessions to nearly VNĐ66.65 trillion (US$2.8 billion), corresponding to a 25.1 per cent gain in trading volume to over 3.6 billion shares.

Similarly, the trading value on the HNX also advanced by 38.6 per cent to VNĐ6.9 trillion, equivalent to a 40 per cent increase in trading volume to 469 million shares.

The market's correction caused most of the stock industries to decline. Of which, financial stocks dipped the most with 4.8 per cent in market capitalisation, followed by realty and information technology stocks.

Foreign investors were net buyers on both exchanges last week, worth more than VNĐ1.8 trillion, supporting the overall market. In terms of net volume, they bought Hoà Phát Group (HoSE: HPG) most with 39.7 million shares.

Others were fund certificates FUEVFVND and Sacombank (STB) shares with 13 and 12.9 million units, respectively.

On the contrary, Sieu Thanh Corporation (ST8) was sold the most with 6.4 million shares.

Analysts from Saigon - Hanoi Securities JSC (SHS) said that last week was a strong correction week for the market as the VN-Index dropped more than 40 points during the week and closed at 1,077.15 points. The market has entered a correction week after four weeks of consecutive gains since the beginning of 2023.

However, SHS believes that the market is in a recovery phase after escaping the downtrend but failing to establish an uptrend immediately. The market needs a period of accumulation in a narrow range to create a solid foundation before a new uptrend can be created.

In the short term, SHS believes that last week’s correction was predictable and necessary to accumulate more, and the recovery wave may not be over. And after the correction period, the VN-Index may still reach the level of 1,150 points, the securities firm added.

The current phase of the market is in a recovery wave with a wide range after a downtrend, and gradually the market will fluctuate less and less to accumulate. However, in the accumulation phase, more and more medium- and long-term investment opportunities will form, especially in the group of strong stocks that are less affected by the recent downtrend and those that recover earlier and tend to break the peaks.

Meanwhile, VCB Securities Company (VCBS) said that the short-term risks of the VN-Index will be reduced temporarily.

It is highly likely that the market will continue to fluctuate in a narrow range and that there will be a clearer divergence among groups of stocks in the coming sessions. In that case, the rebound of demand might help the VN-Index jump after touching the MA20 crossover area.

"Investors can disburse capital with a proportion of 10-15 per cent for large-cap banking ticker symbols, and that tends to lead the general market to recover," said VCBS. — VNS