After a steady rise to reach the highest level in 18 months, the stock market experienced a sharp decline in the last trading session.
VN-Index closed at its lowest point on March 8 with a decrease of 21.11 points (1.66%) to 1,247 points, the largest single-day drop since November 23, 2023. The market was dominated by red with 660 declining stocks, more than double the number of advancing stocks.
Notably, the market liquidity also surged with a trading volume exceeding 1.3 billion shares. Specifically, the value of matched orders on HOSE reached over VND 31,500 billion (equivalent to nearly USD 1.3 billion), setting a record high in nearly 7 months, just after a 55-point drop on August 18, 2023.
In fact, today’s market decline confirms the downward trend of VN-Index on March 8 in the past. Market fluctuation statistics on March 8 show that VN-Index has dropped 14 times on March 8 in the past 23 years (equivalent to a probability of over 60%), while only increasing 8 times.
Today’s sharp decline session along with a record liquidity indicates that the market is undergoing strong profit-taking as stocks have experienced a long rally.
Regarding today’s sharp decline session, Mr. Bui Van Huy, Director of Ho Chi Minh City branch, DSC Securities Company, said that the simple reasons leading to the market correction are that the market has also undergone a long rally since the beginning of November last year, many stocks have soared by tens of percent and are in an overbought state.
In fact, the market has shown distribution signals for about 2 weeks with a surge in liquidity. The past 2-week rally has mainly focused on blue-chip stocks and gradually showed signs of weakness. In addition, the resistance level of 1,280-1,300 is a strong resistance zone, so the current adjustment is relatively normal. Although the market still has a chance to surpass this resistance zone in 2024, it is not the story of the first half of the year.
Recently, the market has been flooded with good news, and Mr. Huy believes that is the common characteristic of the movement during euphoric periods. When the market corrects, bad news immediately emerges.
With today’s sharp decline session and high liquidity, DSC expert believes that today’s trading session carries many clear distribution signals. A typical example is the banking group – the market-leading group in recent times has shown signs of short-term distribution.
Therefore, the expert believes that after today’s session, the market needs a necessary period of rest and accumulation for about 1-2 months. The current strong support level is around 1,200 points. With the forecast of market consolidation, short-term investors need to observe more instead of rushing at the current time.
