More gains in store but further upside seen

More gains could be on the cards for Thai stocks today, tracking bullish overseas sentiment  after a rally in US and European equities last  Fri boosted  by further stimulus from ECB and a  sharp rise in global crude oil prices. NYMEX crude oil prices jumped 2% last Fri after the International Energy Agency (IEA), the world’s energy watchdog said the oil market might have found a bottom though Goldman Sachs said the 50% rally in under two months was premature.

• However,we expect Thai stocks to remain range-bound today as the attention of investors  around the globe may shift back towards the upcoming series of policy meetings of other global major central banks after the ECB continued with its ultra-loose monetary  policy. The BOJ is due to meet tomorrow, followed by the US FOMC meeting on Mar 15-16. The trading range for the SET index today is expected to be between 1380-1405 points today.

• In valuation terms, Thai stocks are no longer cheap after the SET index’s FY16 forward  P/E ratio has risen toward around 15x, the upper bound of its normal trading range. Statistics suggests that both foreign and institutional trading volumes would normally slow down after the SET index’s forward P/E ratio climbs above the 15x level.

• Short-term strategy: The ‘sell the rallies’ remains the preferred tactic in view of limited room for further upside. Equity holdings should be maintained at 80% of the portfolio with the following key investing themes in play today: 
(1) Tourism recovery play: Hold onto AOT shares.
(2) 4Q earnings play: Hold onto short sell positions in TTA.  
(3) Infrastructure play: Hold onto shares.

Source: poems.in.th / settrade.com