July 05--Thai shares yesterday briefly hit the 1,500-point mark, the highest level in almost a year, before profit-taking pared the gain and sent the market to close below the threshold.
However, analysts believe the Thai stock market's uptick will continue, and the bourse will firmly break through the psychological level in coming days due to positive sentiment surrounding it.
The SET index broke through the 1,500-level in early trade as investors took their cue from Wall Street's all-time high, peaking at 1,504.91 points before investors locked in profits in the afternoon trading session.
The main gauge yesterday eked up 0.18% to close the market at 1,495.83 points with brisk turnover of 46.2billion baht. Foreign investors were net sellers worth a mere 159 million baht yesterday.
"Finally, we believe the index will eventually reach 1,520 points even though some gain was pared. Hence, we recommend investors hold their existing positions," said Somchai Anektaweepol, head of research at Finansia Syrus Securities.
He said the SET index was likely to retreat to test the support level in the near term before bouncing back.
Sukit Udomsirikul, managing director of Maybank Kim Eng Securities, said a rally in world stock markets, lifted by strong US economic data, bolstered Thai stock market sentiment.
"The low US interest rate will give a boost to the equities market and attract foreign fund inflows to the region including Thailand," he said.
Even though the SET's price-to-earnings ratio is approaching 15 times, the market outlook remains attractive. However, the market could climb at a slower pace.
The broker now overweights the transport and shipping sectors and sees a positive outlook for tourism.
However, it warned that prices of property and retail shares are close to their fair value.
Mr Sukit tipped next week's support at 1,480 points, with resistance at 1,505 and then 1,525.
Tisco Securities vice-president Apichat Poobunjirdkul said promises by the European Central Bank that cheap money would be sloshing around for years could stoke expectations of a fresh round of capital influx to emerging markets, which offer better returns than deposits, and this could be the driver for the Thai stock market.
However, upside is fairly capped after the recent run-up in the Thai stock market, he said.
Mr Apichat said investors should keep a close eye on the new draft constitution, as sentiment would be depressed if it failed to be completed by mid-July.