Sell-off risks rise as VN-Index nears resistance: experts

Sell-off risks rise as VN-Index nears resistance: experts

Even though the VN-Index closed last week near its highest level, accompanied by improved liquidity, the market needs more time to confirm whether a sustainable uptrend is taking shape.

A trader talks to an investor in the trading room of a securities firm. —Photo SSI

The domestic stock market posted a strong recovery last week, with the VN-Index rising 4 per cent after finding support around 1,680 points early in the week and recording four consecutive gaining sessions following a month-long correction.

The benchmark index gained 68.24 points to close the week at 1,774.15 points, while trading liquidity improved significantly, reflecting renewed investor participation.

Average trading volume on the Hochiminh Stock Exchange (HoSE) reached nearly 712 million shares per session, up 22.2 per cent from the previous week. 

On the Hanoi Stock Exchange (HNX), the HNX-Index rose 3.57 points, or 1.38 per cent, to 262.70 points, with average trading volume increasing 29.6 per cent week-on-week to 60.9 million shares per session.

The recovery extended to several sectors, including real estate, construction and industrial park property. However, the benchmark's gains remained heavily influenced by large-cap stocks, raising questions among analysts about the breadth and sustainability of the rebound.

Đinh Quang Hinh, head of macroeconomics and market strategy at VNDIRECT Securities Corporation's analysis division, said liquidity had improved, with trading volume exceeding the 20-session average by 17.6 per cent. 

Nevertheless, the narrowing range of gains suggested investors were becoming more cautious as the VN-Index approached the resistance level.

Banking stocks provided an important boost in the final session of the week. The sector index rose 1.59 per cent, with gains dominating the group. Eight of the 10 stocks making the largest positive contributions to the VN-Index were banking shares.

"The VN-Index closed the week near its highest level, accompanied by improved liquidity," Hinh said.

"This is a positive signal that the downtrend over the previous four weeks may be losing momentum. However, the market needs more time to confirm whether a sustainable uptrend is taking shape."

He identified the 1,776–1,780-point.range as a notable resistance zone, adding that the index's performance there, together with its ability to maintain liquidity and broaden buying interest, would determine the strength of the recovery.

Nguyễn Thế Minh, director of investment banking at An Binh Securities Corporation, also questioned the quality of the rebound.

"The market's advance still raises questions about the quality of the recovery. The index has been supported mainly by Vingroup (VIC) and Vinhomes (VHM), while some other key sectors have shown signs of cooling and liquidity has not surged as expected," he said.

Minh warned that profit-taking pressure could intensify as the index entered the resistance zone. Investors, he said, should distinguish between a technical rebound and a new uptrend supported by genuine capital inflows.

BIDV Securities Corporation (BSC) noted that after four consecutive gaining sessions, the VN-Index was approaching the 1,768–1,778-point resistance range. 

The area could become particularly sensitive over the next one or two sessions as the market tests whether it can break through, potentially triggering greater volatility. BSC advised investors to remain cautious amid uncertain market movements.

Nguyễn Duy Phương, senior director of financial analysis at DG Capital, expected the VN-Index could experience volatility early on this week as investors assess supply and demand around 1,750–1,770 points.

If buying interest remains strong, particularly in banking and large-cap stocks, the index could move higher to test the 1,800-point threshold.

Conversely, weaker liquidity, buying concentrated in a small number of heavyweight stocks and increased profit-taking near resistance could trigger short-term corrections. 

Bizhub