Market to enter “Low zone” ahead of Lunar New Year as risk factors emerge

Two investors watch stock indices on computer’s screens. The market’s struggling trend may persist into the next trading week due to the lack of consensus among different industry groups in terms of cash flow attraction. — VNA/VNS Photo

HÀ NỘI — The stock market is poised to enter a phase of limited supportive information leading up to the 2024 Lunar New Year, with several emerging risk factors that could impact the overall market trend.

On Friday, the benchmark VN-Index experienced a decline of 0.65 per cent, closing at 1,154.70 points.

Throughout the past week, the average trading volume on the southern exchange stood at 90.5 million shares per session, with a total value of VNĐ1.8 trillion (US$73 million).

Head of Macro and Market Strategy Analysis Division at VNDIRECT Securities Joint Stock Company (VNDIRECT), Đinh Quang Hinh, said that the recently released US inflation data, which exceeded expectations, is likely to dampen investor enthusiasm in international markets.

On the domestic front, gold prices remain high, and the sudden resurgence of exchange rate pressure in recent sessions poses a risk that requires close observation, he said.

Acknowledging the market’s struggling trend, Hinh anticipated that it may persist into the next trading week due to the lack of consensus among different industry groups in terms of cash flow attraction.

While the recent increase in stock indexes has been primarily driven by banking stocks, other sectors have not exhibited significant signs of attracting cash flow.

Considering the potential profit-taking pressure on banking groups in the upcoming trading sessions, the absence of an alternative leading group in the market might pose challenges for sustaining the upward trajectory.

Friday’s trading session saw an increase in liquidity compared to the previous session, indicating that supply in the market is being maintained and exerting pressure, said Việt Dragon Securities Co. 

While the decline was relatively modest due to support from the banking sector, the market showed a notable presence of red indicators, it said.

With the continued presence of supply, a correction in the next trading session is possible, but the extent of the correction may not be significant. Additionally, cash flow is expected to increase and provide support when the market retreats to lower price levels.

Therefore, it is advisable for investors to closely monitor the movements of cash flow that support the market. Currently, investors may consider waiting for favourable price ranges to purchase stocks that have recently shown positive accumulation patterns.

In the short term, it is recommended to capitalise on market upswings to take profits on stocks that have reached resistance levels.

According to Phạm Bình Phương, an expert from Mirae Asset Securities Joint Stock Company (Việt Nam), the VN-Index has started to display signs of correction since early this year. On January 12, the index recorded a decrease of more than seven points, the largest decline during this period. Phương suggested that it is likely the index will continue to adjust, with a potential target of 1,130 points. —VNS