Large cash flows return to boost stock market

Vietnam’s stock market recorded positive signals this week as domestic investors splashed the cash to help the VN-Index break from its sideways trajectory to find higher ground.

Banking stocks gained simultaneously on Friday, helping the benchmark index on the Ho Chi Minh Stock Exchange (HoSE) to close the trading week on a positive note. It rose 1.15% to close the day at 1,090.84 points. For the whole week, the index gained 20.08 points, up 2.55% against the previous week.

On Monday, green could be seen across all sectors as the index approached the 1,080-point mark. However, selling pressure increased gradually in the next three sessions, especially the correction of large-cap stocks, which put pressure on the index and halted the gaining streak.

However, increasing demand for banking stocks on Friday helped the index rebound strongly, surpassing the resistance area to move towards the 1,100-point area.

During the week, liquidity on the HoSE reached VND78.2 trillion ($3.33 billion), up 26.7% compared to the previous week. Trading volume increased by 29.4% and was at its highest level since the beginning of the year.

Liquidity on the Hanoi Stock Exchange (HNX) increased by 26.3% to nearly VND9.46 trillion (almost $403 million). Foreign investors continued to be net sellers on the HoSE with almost VND1.18 trillion (over $50.4 million), but were net buyers on the HNX with VND7.58 billion (almost $323,000).

DIG, VNM, and VJC of construction group DIC, Vinamilk, and VietJet Air had the most negative impacts on the VN-Index this week. On the other hand, TCB, MBB, and VCB of lenders Techcombank, MBBank and Vietcombank were the most positive.

Market starts to rally

Saigon-Hanoi Securities JSC (SHS) believes that in the short term, the VN-Index will maintain a strong recovery trend towards the resistance area of 1,100 points or even 1,150 points. This means there is an expectation of a medium-term uptrend if the index surpasses 1,150 points.

If the market fails to form this uptrend, the support level will be in the area of 1,000-1,050 points. "Accumulation has been seen over the past six months. The accumulation base is good enough for a medium-term uptrend ahead. In our opinion, the market has moved from a cautious state to a positive state," SHS said.

The firm’s analysis team noted that in the short term, the market has formed a rising wave and opened up opportunities for surfing. In the medium and long term, the market is preparing for a new uptrend cycle, and if investors want to buy in, they should choose leading stocks with good fundamentals, and stocks with stable growth potential.

From a technical point of view, Vietcombank Securities Company (VCBS) said looking at the daily chart, the two indicators MACD (moving average convergence divergence) and RSI (relative strength index) are going up with no sign of the first peak. This means cash is flowing into the market and the VN-Index is likely to move toward the 1.100-point area before there is a stronger correction. However, on the hourly chart, the two indicators were at high levels, so the market will still experience wobbles while rallying.

VCBS said: “We recommend investors continue to hold their proportion of stocks, disbursing only 20-30% of the volume of profitable and available shares in their portfolios. Investors should avoid chasing purchases during strong gaining sessions."

Viet Dragon Securities Corporation (VDSC) forecast that cash flow will continue to support and help the market gradually move to higher-price ranges in the near future, but selling pressure may appear at the resistance area of 1,100-1,125 points. Therefore, investors should continue to hold or exploit short-term opportunities in stocks with good technical signals that are attracting cash flow.

Like VDSC, Saigon Securities Inc. (SSI) believes that getting out of the sideways zone in a narrow band has created a new uptrend for the index with a short-term target of 1,100 points. With the new uptrend, strong cash flow into the market will open more opportunities for investors.