Share prices are expected to face volatility this week as they move closer to the key resistance at about 8,300 points after reaching an almost seven-year high, dealers said on Friday.
They said small and mid cap electronic stocks which have scored the greatest gains in recent upside may burden the heaviest pressure.
Although appreciation of the New Taiwan dollar is likely to bring more fund inflows, there are concerns that a more expensive local currency will impose pressure on the export-oriented manufacturing sector.
160-POINT RANGE
The market is expected to move between 8,140 points and 8,300 points this week, dealers said.
For the week to Friday, the weighted index closed up 89.93 points or 1.10 percent at 8,249.90 after a 1.57 percent increase a week earlier.
Average daily turnover stood at NT$107.42 billion (US$3.25 billion), compared with NT$106.42 billion a week ago.
"After Friday's rally, the room for further gains is limited. I expect volatile movements ahead of the 8,300 point level and investors had better keep cautious," Capital Securities Corp (
LONG TERM VIEW
"But don't put too much emphasis on short term fluctuations. It is pretty technical," Huang said.
Huang said Friday's strong showing of a 1.29 percent rise indicated many local investors have shrugged off worries over China's recent tightening measures to cool off its equity market.
He added undeterred Wall Street and neighboring markets which have extended their gains despite China's move also encouraged investors here.
LIQUIDITY NEEDED
Yuanta Core Pacific Capital Management (元大京華投顧) analyst Jacky Tam said the market needs more liquidity to vault the weighted index over the 8,300 point technical hurdles.
"Although a rising NT dollar appears more attractive to foreign money, local exporters are faced with higher foreign exchange risks and weaker competitiveness," Tam said.
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