KLCI could stage recovery on global rally

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KUALA LUMPUR (Feb 13): The FBM KLCI could stage a slight recovery on improved global market sentiment after the overnight gains at US and European indices.

Major U.S. and European equity indices rallied to multiyear or record highs on Thursday after a cease-fire between Russian separatists and Ukrainian forces, and surprisingly aggressive stimulus by Sweden's central bank, cheered global markets, according to Reuters.

U.S. Treasury prices wavered as data showed a key measure of U.S. consumer spending barely rose in January and initial claims for state unemployment benefits rose more than expected, suggesting the economy started the first quarter on a softer note, it said.

AllianceDBS Research in its evening edition Thursday said that dampened by the down close in the preceding day, the FBM KLCI had on Feb 12 traded lower to a low of 1,780.21 as market participants continued to play on the selling side in anticipation of a lower market.

It said that under the stronger selling interest, the benchmark index was in the red throughout the trading sessions before settling near the day’s high at 1,789.07 (- 9.88 , - 0.55%).

“In the broader market, losers outnumbered gainers with 436 stocks ending lower and 326 stocks finishing higher. That gave a market breadth of 0.74 indicating the bears were in control,” it said.

AllianceDBS Research said the benchmark index continued to be in a losing streak over the past 4 days. 

It said the lower low on Feb 12 indicated that sellers were again in better control over buyers.

Given the down close, it said the market was expected to trade lower in the coming few days with immediate support pegged at 1,780.

The research house said a downside penetration of 1,780 should see the benchmark index under the pressure to test the next support at 1,760.

Indicator wise, the MACD is still above the 9-day moving average line, it said.

“The analysis of overall market action on Feb 12 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,780.21 level on Feb 13,” said AllianceDBS Research.