KUALA LUMPUR (March 18): Stocks on Bursa Malaysia are expected to end the week on a positive note today with the benchmark FBM KLCI hovering between the 1,685 and 1,710-point levels in the coming few days.
The US dollar index dropped to a five-month low on Thursday while shares on Wall Street rallied to lead global equities higher as a dovish US Federal Reserve emboldened investors to take on more risk, according to Reuters.
The S&P 500 briefly turned positive for the year and closed at its highest since Dec 31, led by the materials and energy sectors. The Dow industrials ended above its 2015 closing level for the first time this year, it said.
AllianceDBS Research in its evening edition Thursday said that supported by the up close in the preceding day, the FBM KLCI had on March 17 opened the day on a positive note.
It said the benchmark index subsequently traded into the 1,700 zone to reach a high of 1,708.62 as market participants continued to play on the buying side in anticipation of a higher market.
The research house said under the persistent supportive buying interest, the benchmark index was in the green throughout the trading sessions before settling at 1,703.19 (up 9.76 points or 0.58%).
"In the broader market, gainers outnumbered losers with 490 stocks ending higher and 341 stocks finishing lower. That gave a market breadth of 1.43 indicating the bulls were in control," it said.
AllianceDBS Research said the market crossed over the 1,700 level again on March 17 with buyers in better control over the sellers.
"This can be seen from the higher high market trading pattern. While the crossover of 1,700 should help to enhance market buying confidence, but many market participants are still seen not convinced with only one market settlement above the 1,700 level at this juncture.
"In a market upside breakout scenario, market participants often add in a filtering criteria of at least three market settlement above a significant resistant level.
"This is to minimise the risk of a fake out. Thus, the market is expected to trade between 1,685 and 1,710 in the coming few days," it said.
The research house said this small consolidation platform would pave the way for market to trade upward.
It said an upside breakout of 1,710 should see a test of next resistance at 1,730, adding that indicator wise, the MACD was above the nine-day moving average line.
"The analysis of overall market action on March 17 revealed that buying power was stronger than selling pressure.
"As such, the FBM KLCI would likely trade above the 1,708.62 level on March 18," said AllianceDBS Research.
Based on corporate announcements and news flow yesterday, companies that may be in focus today could include the following: British American Tobacco (M) Bhd, Atlan Holdings Bhd, Hock Seng Lee Bhd, Ahmad Zaki Resources Bhd, Bintai Kinden Corporation Bhd, EG Industries Bhd, Inix Technologies Holdings, R&A Telecommunication Group Bhd, APFT Bhd and automotive-related stocks.