The VN-Index on the Hồ Chí Minh Stock Exchange lost 1.04 per cent to close Friday at 1,255.11 points, totalling a three-day fall of 2.5 per cent.

The market continued to weaken with unsuccessful recovery efforts during the session and lost the MA(20). Liquidity increased compared to the previous session, indicating that the supply side is still exerting pressure on the market, said Việt Dragon Securities Co.

In the current market landscape, the 1,250-point zone has emerged as a temporary support level that holds the potential to facilitate recovery phases. This zone acts as a critical threshold for market stability, providing some respite amidst the prevailing volatility. However, it is essential to exercise caution and recognise the mounting market risks that loom on the horizon, the company said.

With the market's inherent unpredictability, investors should adopt a prudent approach and reassess the prevailing market situation regularly. This involves closely monitoring economic indicators, geopolitical developments, and corporate news that can significantly impact market dynamics. By staying informed and maintaining a vigilant stance, investors can make well-informed decisions and adjust their investment strategies accordingly.

Effective portfolio management becomes paramount in such uncertain times. A key focus should be on mitigating risks to safeguard one's investment capital. This can be achieved by considering profit-taking opportunities during recovery phases, and capitalising on upward price movements to lock in gains and reduce exposure to potential downside risks.

Market Outlook for April

Investor pressure arises from both individual and foreign participants in the market.

According to the latest report by FIDT, domestic individual investors have contributed significantly to the market's upward movement, with a net trading value of VNĐ14.6 since the beginning of this year, including a substantial increase of VNĐ10 trillion in March alone.

However, the dominance of individual investors, accounting for over 80 per cent of total market trading value on average, poses risks to the overall market. Their preference for high leverage and susceptibility to news impacts has led to high volatility in the Vietnamese stock market.

The macro-economic landscape in April remains uncertain, and negative news can trigger strong reactions from individual investors, potentially leading to significant capital outflows.

Furthermore, foreign investors' net selling activities and the growing proportion of individual investors' capital in total trading contribute to increased volatility as the latter group loses its upward momentum.

The FIDT analysis team anticipates further foreign capital withdrawals due to various factors. Firstly, foreign investors' net selling is concentrated in active funds rather than ETFs, with a focus on markets with more technology sectors rather than those driven by cyclical industries.

Secondly, despite reaching its peak, the US Federal Reserve's cautious approach to early interest rate cuts signals a reluctance to implement such measures.

The FIDT analysis team expects continued flow of investment funds with medium-term prospects into the market, while risk-averse funds will adopt contingency plans. Therefore, the market dynamics in April are expected to be volatile and challenging to predict. VNS