"There is room for the benchmark index to rise in the medium- and long-term, and cash flow has become more diversified," said Nguyen The Minh, Head of Retail Research at securities firm Yuanta Vietnam.

The market’s recent rally of nine consecutive sessions in which the VN-Index has gained 59.43 points, or 6.25 percent, to close Friday at 1010.22 points, was largely due to buying pressure on VN30 blue chips.

The VN30 is a basket of the Ho Chi Minh Stock Exchange’s (HoSE) 30 largest caps. But now, the market is not led by several key stocks, Minh said.

While the VN-Index’s recovery at the end of the second quarter, after Vietnam ended its Covid-19 national semi-lockdown, had depended on stocks in the banking, real estate, and retail sectors, cash has also flowed into construction materials and oil and gas sectors in the past month, he said.

"For instance, in Thursday’s session, HPG of steelmaker Hoa Phat Group, a leading stock in the market, plunged over 5 percent, but the VN-Index still gained. Previously, if investors were selling to take profits on the market’s leading tickers, it would usually lead to losses on the index," he said.

The rotation of VN30 tickers that have become key pillars of the market has allowed the market to keep its momentum, while cash has also flowed to smaller capped stocks in the same industries, he dded.

Based on various reports from different securities companies, analysts believe that the VN-Index will see some corrective pressure in the short-term, but in the medium-term, the 1,000-point threshold will not be a major barrier.

The recovery of some industry groups like real estate and industrial zones in the final months of the year, and major M&A deals scheduled for next year will be a driving force for the market. New cash from first time individual investors, who are finding other investment channels less attractive than the stock market, will continue to play an important role in the market’s growth, they said.

With the State Bank of Vietnam continuously lowering interest rates to stimulate post-lockdown business recovery and regulations on the bond market being tightened, securities have become one of the most attractive investment channels.

Liquidity on the HoSE in the past week surged to VND10 trillion ($431.82 million) per day, more than double the average daily trading in the past few years, analysts have noted.

Domestic dominance

"Many investors still observe the actions of foreign investors, but in fact, the cash flow of individual domestic investors is the dominant factor in the market today," Minh said, adding that around 80 percent of the market’s liquidity comes from this group now.

A report from the Bao Viet Securities Company (BVSC) has also concluded that resistance around 1,000 points will likely create correcting pressure in the short-term, but cash will not leave the market.

"The market will fluctuate, and cash will spread into different groups of stocks, seeking tickers that have not seen much growth in the near past for new profit-making opportunities when large-caps are already anchored in high-price levels," the BVSC report said.

According to Saigon-Hanoi Securities (SHS), the market will continue to gradually move to the next resistance zone at 1,030 points, which was the VN-Index’s November 2019 peak, at which point the market will see strong fluctuations.

Another market driver in the near future could also come from margin trading, Minh said. Investors are still cautious, so they are using low leverages because they fear unexpected events like Covid-19 will return, while securities companies, including those with South-Korean stakes, still have large amounts of capital to lend, he added.

The VN-Index gained 0.6 percent to 1,005.97 points Thursday, the first time it crossed the four-digit figure since November 20 last year. It had started the year off at 966.67 points, began crashing at the end of late January as a result of Covid-19 and bottomed at 659.21 points in late March before recovering to its present level.