Market likely to correct this week

The domestic stock market experienced a positive trading week, with the benchmark VN-Index surpassing the threshold level of 1,255 points, but experts warn that there are risks of corrections in both the short and midterm.

The VN-Index on the Hồ Chí Minh Stock Exchange (HoSE) ended last week at 1,258.28 points, the highest close since September 6, 2022. On the northern bourse, the Hà Nội Stock Exchange (HNX), the HNX-Index was last traded at 236.43 points.

For the week, the former gained 3.8 per cent while the latter added up 2.3 per cent.

The market’s benchmark closed February on a negative note but still marked a monthly rise of 7.59 per cent from January. This was also its fourth straight month of gains since last November.

The latest report from Saigon-Hanoi Securities JSC (SHS) showed that the liquidity on HoSE amounted to nearly VNĐ116.3 trillion (US$4.7 trillion) during the week.

Although there was a slight decrease compared to the previous week, it remained above the average trading volume of 900 million shares per session.

The market trend also indicates that cash flows remain robust, circulating and spreading across various industry sectors.

Numerous stocks or groups of stocks have already surpassed their previous highs, resulting in a significant increase in liquidity.

Foreign investors increased their trading activities during the week and made modest net purchases of VNĐ98 billion on HoSE and nearly VNĐ23 billion on HNX.

Last week, the stock market received significant economic information, such as the Consumer Price Index (CPI) in February, which rose by 1.04 per cent from January, with a two-month average increase of 3.67 per cent year-on-year.

The total import-export turnover was projected to reach $114 billion, marking an 18.6 per cent rise over the same period last year, and the trade balance for goods recorded a surplus of $4.7 billion.

On Wednesday, the Ministry of Finance and the State Securities Commission (SSC) held a conference to discuss the implementation of tasks for the development of the stock market in 2024.

Nguyễn Khắc Thành, an analyst at SHS, argues that while the VN-Index has topped 1,250 points, the market’s recent growth was driven by excitement rather than consistent accumulation.

As a result, the VN-Index is likely to lack a clear direction and may be correct.

“And, the index is expected to accumulate in the area of 1,150-1,250 points. However, the market’s bullish sentiment in the short-term could push the VN-Index to the strong resistance zone of 1,300 points,” Thành said.

For the medium-term outlook, Thành forecasts that the VN-Index is gradually forming a wider accumulation channel between 1,150 and 1,250 points. Currently, as the VN-Index approaches the upper resistance level of this accumulation area, the mid-term risks are increasing.

According to Thành, the current phase poses risks both in the short and medium terms.

From a medium- to long-term perspective, the stock market is trading within the upward movements of the accumulation channel. However, as it nears critical technical resistance levels, the market may experience significant fluctuations.

Meanwhile, the analysis team at Vietcombank Securities Company (VCBS) has a more positive stance as it sees that the VN-Index has rebounded and regained its bullish momentum, signalling a potential reversal after retesting the support zone around 1,250 points.

In the daily chart, most indicators are pointing at an upward trend, and the cash flow indicator remains positive. Market liquidity remains high, and there is rotational divergence among industry sectors. This indicates that the VN-Index is still on an upward trajectory and is likely to reach the 1,300-point level soon.

Looking at the hourly chart, VCBS said that the indices have set initial peaks, signalling that the VN-Index will likely continue to consolidate and experience fluctuations within a 10-point range around the 1,255-point level before entering a stronger bullish phase.

As a result, the securities firm recommends that investors take advantage of potential corrections this week to invest in stocks that show signs of attracting capital inflows and have undergone a period of solid consolidation.

Viet Nam News