Be wary of buying shares on pullbacks

Many investors currently sell, then purchase again when the price does not fall, or buy on pullbacks, then buy another stock. 

>> VN-Index may keep trading in a narrow range

The VN-Index concluded the 5/4 session at 1,080.86 points. At this point, the market was only increasing slowly, with a margin of less than 0.5% every session.

Because of the drop in the Materials sector, the VN-Index fell by 1.0 point to 1,069.7 points on April 7, 2023. Vn-Index began in the green but swiftly fell as selling pressure increased. The securities industry is the bright light, with numerous large-caps gaining ground, including FTS (7.0%), SSI (3.0%), and HCM (1.7%). On the other side, the Materials sector and several major caps in the Banking sector, such as HPG and VCB, were heavily sold. Profit-taking actions persisted in the afternoon session, sending the VN-Index to an intraday low of 1,063.7 points. GVR (1.9%) is today's top mover, joining SSI (3.0%), MSN (0.8%), VNM (0.5%), and SHB (2.2%) in providing some assistance to the VN-Index.

It was, nevertheless, eclipsed by the bearish big caps VCB (-1.3%), VHM (-1.0%), BID (-0.8%), HPG (-1.4%), and VRE (- 1.0%). As a consequence, the VN-Index closed 0.1% lower than the reference level, at 1,069.7 points. Meanwhile, the HNX-Index rose 0.1% to 211.6 points.

Energy (0.8%), Industrials (0.6%), and Consumer Staples (0.4%) gained ground today, while Health Care (-0.6%), Materials (-0.5%), and Real Estate (-0.4%) fell. GVR (1.9%), SSI (3.0%), MSN (0.8%), VNM (0.5%), and SHB (2.2%) were the top index movers. VCB (-1.3%), VHM (-1.0%), BID (-0.8%), HPG (-1.4%), and VRE (-1.0%) were the top index laggards. The top three significant put-through transactions were FPT with 4 million shares (VND339.3 billion), SIP with 2.1 million shares (VND228 billion), and EIB with 11.4 million shares. (VND221.2bn).

Foreigners net sold on HOSE for VND130 billion, and they also net sold on HNX for VND1.7 billion. They mostly purchased FPT (VND327.2 billion), REE (VND99.9 billion), and TCB (VND33.7 billion), and primarily sold FPT (VND327.2 billion), REE (VND99.9 billion), and STB (VND33.7 billion). (VND97.2bn).

The VN-Index fell by 1.0 point to 1,069.7 points on April 7, 2023.

When the State Bank of Vietnam recently enacted a policy imposing a 5.5%/year maximum on deposit interest rates for 1-6 months, real cash flow has returned to the stock market. However, margin flow is returning to the market since 1-year deposit interest rates are still fairly high, making it appealing to depositors. Thus, over a lengthy period of time, investors have reduced the leverage ratio to a low level, allowing for substantial margin borrowing.

So, in light of the aforementioned unfavorable data, where do investors expect this rally to originate?

Mr. Nguyen Huu Binh, a stock analyst, predicted that it would be due to two factors: First, investors thought that the drop in economic growth in 1Q23 would result in a credit package or further loosening of monetary policy. The fact that the State Bank of Vietnam recently announced a decision to reduce the refinancing interest rate from 6% to 5.5%/year, among other things, adds to investors' confidence.

>> VN-INDEX’s downward trend may continue

Second, the government has just directed the State Bank of Vietnam to deploy a VND 120,000 billion preferential loan package for the development of social housing, worker housing, and other projects, which has many investors optimistic about the revival of real estate stocks. As a result, numerous real estate stocks, including HDG, NTL, DIG, and PDR, have reached their peak.

Many investors currently sell, then purchase again when the price does not fall, or buy on pullbacks, then buy another stock. "Many view the current market rally as bullish, and it is expected to produce several upswing sessions. As a result, the VN-Index may break beyond 1,100 points, but that will be the end of this rise. Investors should exercise caution when purchasing stocks that have had difficulties, such as enterprises that will not have audited financial statements in 2022 or businesses that have been excluded from the margin portfolio...", stated Mr. Nguyen Huu Binh.

Mr. Le Minh Tam, analyst at Yuanta Vietnam, believes the VN-Index will rise to 1,080 points this week. However, several equities that have climbed dramatically in recent months may be attractive to investors. This information may cause the VN-Index to fall to 1,050- 1,060 points. The VN-Index has found support between 1,000 and 1,020 points.