Stock indexes and stocks unexpectedly plunged at the end of the afternoon session on February 23, wiping out the market’s weekly gains. Specifically, on the last trading day of the week, VN-Index briefly rose more than 13 points to 1,240 points thanks to the rise of banking stocks. However, by the end of the session, profit-taking pressure on this group of stocks quickly spread to other sectors, causing the index to drop 15.31 points (-1.25%) and close the week at 1,212 points.
The indexes on the Hanoi Stock Exchange also experienced the sharpest decline since the beginning of February. The liquidity on all three exchanges surged to more than 1.59 billion shares, with a value of over VND 35,104 billion (including matching orders and negotiated orders).
According to the Vietnam Securities Company (CSI), the trading volume on the last trading day surged to a six-month high and the highest since the beginning of 2024, increasing by a strong 77.4% compared to the 20-day average.
The stock market plummeted on the last trading day of February 23, erasing the weekly gains
Mr. Do Bao Ngoc, Deputy Director of CSI Securities Company, said that VN-Index had approached a strong resistance zone around the 1,230-1,250 point mark, creating pressure on the overall market; coupled with the adjustment pressure from the banking stocks at the end of the session on February 23. However, this group of stocks did not have any negative information but simply faced normal profit-taking pressure after a good rally.
Normally, when the market experiences a sharp decline in points after a long period of gains, a surge in liquidity is a sign of a short-term distribution session that has just occurred after a large rally. When there is a distribution signal, the likelihood is that VN-Index has formed a short-term peak and will have to undergo a certain correction afterwards.
Notably, during the recent rally of the market, many investors have been accumulating stocks, especially stocks in the securities, real estate, steel, and public investment sectors… with the expectation that the prospects of these sectors will soar after a long period of accumulation. For example, the securities stocks continuously consolidated for the past 2-3 months while banking stocks surged.
However, when the banking stocks were strongly sold off, causing pressure on the overall market, the downward pressure spread to other groups of stocks, causing a sharp decline.
In the context of the market and the situation of investors, Mr. Do Bao Ngoc advised investors who are still profitable to find opportunities to take profits in the recovery sessions. Short-term investors who do not have stocks should not rush to invest but should wait for the market to find a new equilibrium point to invest in a new rally.
The analysts at SHS Securities Company also said that in the short term, the market has approached the strong resistance zone at 1,250 points. Currently, the psychological support level of the index is in the range of 1,200 points in this correction period. Although the market may have a rebound, short-term investors should be cautious at the current stage, as VN-Index has signaled a correction and short-term risks are increasing.
“Short-term investors should not participate at this stage and should take advantage of the short-term uptrend sessions to reduce the proportion of stocks to a low level. Long-term investors should wait for the market to enter a short-term decline” – recommended by SHS Securities.
