Market to continue its consolidation phase this week

Market to continue its consolidation phase this week

The 1,600 - 1,620 point-range remains a reliable support level in the event of market corrections.

Investors watch the market's movements at a trading floor of a securities firm. — Photo vfs.com.vn

Following a peak of 1,800 points, the Vietnamese stock market is undergoing a correction. Market experts suggest that the benchmark index is currently in a consolidation phase after a significant uptrend that began in April.

On the Ho Chi Minh Stock Exchange (HoSE), the VN-Index recorded its second consecutive weekly drop, closing at 1,683.18 points, down 2.77 per cent and falling below the 1,700-point mark.

During the week, the VN-Index experienced a sharp decline at the beginning, marking record losses, before recovering slightly in the following sessions around the 1,620-point range.

This market behaviour has highlighted a clear divergence among sectors, with liquidity increasing by 17.5 per cent compared with the previous week, indicative of capital shifting toward fundamentally strong stocks with positive earnings.

The HNX-Index on the Hanoi Stock Exchange (HNX) also logged a weekly loss, down 3.2 per cent from the previous week to 267.28 points.

Despite this, foreign investors continued their net selling streak for the 14th consecutive week, with a total value of VNĐ4.36 trillion (US$165.7 million) on HoSE.

Saigon - Hanoi Securities (SHS) analysts believe the VN-Index is in a consolidation phase, testing the 1,700-point region, with strong resistance at 1,730 points — the peak reached during the sharp decline on October 20.

In the short term, selling pressure may increase on stocks that have surged or employed high leverage. However, investment opportunities could emerge in stocks that have been accumulating for a longer period and have returned to price levels seen in April and May, especially those with promising third-quarter earnings.

The market opened the week on a negative note, with many stocks hitting their lower limits and few buyers present.

However, liquidity quickly returned, preventing the VN-Index from falling deeply, stabilising around 1,620 points and gradually recovering toward the end of the week.

The Vietnam Construction Securities Corporation (CSI) said technically, the index ended the week with a long lower shadow, indicating buying interest at lower price levels and suggesting that investors were taking the opportunity to catch the bottom.

CSI noted that total liquidity for the week decreased by 3.9 per cent compared with the average of the last 20 weeks, reaching over VNĐ37.8 trillion. This decline affected 14 of 21 sectors, with securities dropping by 12.2 per cent, steel by 6.25 per cent and banking by 5.27 per cent.

Conversely, telecommunications saw an increase of 8.84 per cent, retail rose by 2.38 per cent, and plastics were up by 2.08 per cent, led by companies such as FPT Corporation (FPT), Phu Nhuan Jewellery (PNJ) and the Viettel stock group.

The VN-Index's ability to hold above the 1,620-point support level indicates a persistent buying-the-dip sentiment.

CSI recommended that investors adopt a cautious strategy, reducing their stock holdings as the VN-Index approaches 1,720 points and waiting for safe buying opportunities if the index adjusts down to 1,560 points.

Tien Phong Securities (TPS) also noted that the VN-Index paused following three recovery sessions. Selling pressure resurfaced as the index approached the 20-day moving average, reflecting a cautious sentiment among investors.

TPS highlighted that the current rebound might end if demand does not improve. However, the 1,600–1,620 point range would remain a reliable support level in the event of market corrections.

After several months of sustained growth, the market is entering a phase of correction and clear differentiation.

Cautious sentiment among investors is returning as the VN-Index fluctuates around the 1,700-point mark, with smart money beginning to selectively target stocks with solid fundamentals, growing earnings and reasonable valuations. 

Bizhub