Investors watch stock indices on an e-board. After a week of failing to surpass the 1,270-1,280 point range, the VN-Index may enter a correction phase. VNA/VNS Photo

HÀ NỘI — The market's loss of support at 1,250 points suggests a temporary setback, and it might require some time to retest the lower support zone around 1,240 points before a possible rebound.

The market benchmark VN-Index on the Hồ Chí Minh Stock Exchange (HoSE) closed Friday at 1,247.35 points, suffering a severe decline of 1.66 per cent.

An average of 1.1 billion shares worth VNĐ27 trillion (US$1 billion) were traded on the HoSE during each session last week.

The market failed to surpass 1,270 points and experienced a quick retreat on Friday, with increased liquidity indicating a surge in profit-taking activities.

"With the market temporarily losing support at 1,250 points, it may take time to retest the lower support zone, expected to be around 1,240 points, before a potential recovery. Investors should monitor cash flow developments in the support zone and consider accumulating stocks that have undergone a significant correction," said Việt Dragon Securites Co.

Following a prolonged upward trend and uncertainty after approaching the previous peak, investor sentiment became more cautious, leading to increased short-term profit-taking pressure. However, market experts believe that market sentiment is likely to stabilise soon. Notably, positive support from the KRX system helped boost the stock prices of securities companies during the past week.

Đinh Quang Hinh, head of Macro and Market Strategy at VNDIRECT Securities Corporation, noted a strong increase in profit-taking pressure when the VN-Index failed to surpass the resistance level at 1,280 points in the previous session. The selling pressure originated from the banking sector, which had been leading the market's recent upward momentum and gradually spread across the entire market.

"The selling pressure intensified towards the end of last week, pushing the VN-Index below the 1,250-point threshold. Despite experiencing a significant correction, investors are advised not to be panic and sell stocks. In fact, the market's upward trend remains intact as the VN-Index continues to trade above the short-term 20-day moving average (MA20)," he said.

If the support level holds, the market's upward trend will be preserved, and funds may flow into stocks that have experienced consolidation in recent times, such as the steel, securities, real estate and mid-cap sectors, Hinh said.

According to Việt Nam Construction Securities Corporation (CSI), the sharp decline at the end of the previous week was not entirely unexpected, as profit-taking signals appeared in the two preceding sessions, preventing the VN-Index from surpassing the resistance level at 1,275 - 1,277 points.

Considering the weekly chart, the upward trend remains unbroken, indicating that the correction formed by the sharp decline at the end of the previous week is likely to be short-term. CSI expects the support level to be around 1,180 - 1,200 points for this adjustment phase, followed by a return to a positive market trend.

Phạm Bình Phương, an expert from Mirae Asset Securities Việt Nam, takes a cautious view and suggests that after a week of failing to surpass the 1,270 - 1,280 point range, the VN-Index may enter a correction phase.

"The short-term support level for the index is currently around 1,232 points. To confirm this, the index may undergo a recovery after breaching the 1,253-point level in the previous session, making it a short-term resistance level for the VN-Index," Phương said. — VNS