KUALA LUMPUR (May 26): The FBM KLCI is likely to extend its cautious run today given the reluctance of local investors to buy in the absence of positive corporate news amidst mixed earnings results.
Oil prices climbed to just shy of US$50 a barrel on Wednesday after a sharper-than-expected fall in crude inventories, lifting energy shares and world stock markets, according to Reuters.
Growing bets on a possible Federal Reserve rate increase as early as in June or July reduced demand for U.S. government debt, it said.
AllianceDBS Research in its evening edition Wednesday said despite the positive opening note on May 25, the FBM KLCI could only reach a high of 1,631.12 as market participants decided not to play a buying game.
It said that in the absence of stronger buying support at 1,631.12, renewed selling pressure chipped in to push the benchmark index down to a low of 1,623.58 before settling near the day’s high at 1,630.96 (up 5.12 points or 0.31%) in the last few minutes buying of selective blue chip stocks.
“In the broader market, losers outnumbered gainers with 510 stocks ending lower and 302 stocks finishing higher. That gave a market breadth of 0.59 indicating the bears were in control,” it said.
AllianceDBS Research said the lower low on May 25 indicated that sellers were in better control over the buyers.
“Buyers apparently were not keen to establish stock positions because they did not want to see their investible money locked in the market for no good reason.
“Given a choice to trade, market participants chose to play on the selling side as there had been a tendency of the market to drift lower in the absence of good positive news flow.
“Following the last few minutes buying of selective blue chip stock to prop up the benchmark index to settle near the day’s high at 1,630.96, the market is likely to move between 1,620 and 1,637 in the coming few days,” it said.
The research house said a fall below 1,620 would put pressure on the market to test the recent low of 1,611 (May 16).
It said that conversely, a crossover of 1,637 should lift the market to the next hurdle at 1,652, adding that indicator wise, the MACD is marginally above the 9-day moving average line.
“The analysis of overall market action on May 25 revealed that buying power was weaker than selling pressure.
“As such, the FBM KLCI would likely trade below the 1,623.58 level on May 26,” said AllianceDBS Research.
Based on corporate announcements and news flow yesterday, companies that may be in focus today could include the following: Kelington Group Bhd, Telekom Malaysia Bhd, Sime Darby Bhd, RHB Capital Bhd, TSH Resources Bhd, WCT Holdings Bhd, Dayang Enterprise Holdings Bhd, Berjaya Assets Bhd, Boustead Holdings Bhd and Axiata Group Bhd.
FBMKLCI - Market Preview: KLCI likely to extend cautious run, next hurdle at 1,652
http://www.theedgemarkets.com/en/article/klci-likely-extend-cautious-run-next-hurdle-1652
