Market expected to remain on an uptrend this week

Market expected to remain on an uptrend this week

Sectors that have consolidated and built a base over the past week are likely to show better performance this week.

Investors watch the market's movements at a securities firm's trading office in Hà Nội. — VNA/VNS Photo

The domestic stock market posted a robust trading week, with the VN-Index climbing to 1,704.31 points by the end.

This positive shift was partially fuelled by a notable reversal in foreign investor behaviour, who shifted to net buying.

The upward momentum was significantly supported by a strong recovery in demand following recent corrections, particularly during mid- and late-week sessions, where the index saw gains of nearly 30 points in each session. 

This resurgence allowed the VN-Index to swiftly reclaim the psychologically important level of 1,700 points.

For the week, the market’s benchmark gained 57.42 points, or 3.49 per cent.

Market liquidity displayed marked improvement as capital flowed back into large-cap stocks. 

Notably, foreign investors surprised the market by turning to net buying in the first two days of the week and the final session. Over five trading sessions, foreign investors accumulated a net purchase of VNĐ251 billion (US$9.5 million) across the market.

Nguyễn Thế Minh, head of the Research and Development Division at Yuanta Vietnam Securities, said that the impressive recovery demonstrated a significant rebound in the VN-Index, with multiple stocks approaching their ceiling prices. 

A noteworthy aspect of this recovery was the broader distribution of capital among different stocks, as Vingroup’s influence no longer dominated.

Despite this bullish move, many sectors remained stagnant, suggesting that while there was an improvement in liquidity, it was not yet strong enough to indicate widespread agreement across the market. 

Minh added that for the upcoming week, the market would continue to require robust and active capital flow.

Similarly, Đặng Trần Phục, chairman of AZfin Vietnam, remarked that the week’s gains still reflected a technical rebound and lacked the foundation to affirm that a mid-term bottom has been established. 

With liquidity levels remaining below VNĐ20 trillion per session, investor caution prevailed, indicating that substantial capital was still on the sidelines observing market developments.

On the short-term outlook, Phục leans towards a positive scenario. 

"Sectors that have consolidated and built a base over the past week, such as construction, real estate, steel and technology, are likely to show better performance this week", he said. 

"However, the potential for widespread strong breakouts remains low after the recent steep declines. Therefore, a recovery paired with accumulation seems to be the most fitting scenario".

Experts from Vietnam Construction Securities echoed the optimism, noting improving positive trends on the daily charts as recovery sessions occurred with volumes exceeding the 20-session average. 

However, they cautioned that the positive signals had not been fully validated since liquidity was still predominantly focused on large-cap stocks, while most other stocks remained stagnant or slightly declined.

Current recommendations from various securities firms urge investors to be cautious, lower their stock proportions and explore purchasing only small amounts. 

The decision to deploy significant capital now hinges not just on index levels but heavily on the flow of capital. A convincing revival of liquidity will be essential before implementing aggressive purchasing strategies. 

Bizhub