KUALA LUMPUR (Nov 19): The FBM KLCI is likely to trend higher today on improved buying sentiment, in line with the higher overnight close at global markets and Wall Street.

Stock markets around the world rose on Tuesday and the yen hit a seven-year low as news of a snap election and a delayed tax increase in Japan bolstered hopes for new stimulus measures a day after data showed the country was back in recession, according to Reuters.

Wall Street got additional lift from merger deals, rises in healthcare issues and benign U.S. inflation data, with the S&P 500 and Dow Jones industrial average closing at new highs, it said.

AllianceDBS Research in its evening edition Tuesday said the FBM KLCI had on Nov 18 traded marginally lower to 1,805.35 after the opening bell as some market participants continued to play on the selling side in anticipation of a lower market.

“However, non-follow through selling pressure in the area of 1,805.35 prompted aggressive buyers to acquire some of the beaten down index-linked heavyweights. This lifted the benchmark index to settle at the day’s high of 1,818.38 (+11.90, +0.66%),” it said.

The research house said that in the broader market, gainers outnumbered losers with 437 stocks ending higher and 345 stocks finishing lower.

It said that gave a market breadth of 1.26 indicating the bulls were in control. 

AllianceDBS Research said that having fallen for 10 days out of the past 11 market days, the benchmark index had on Nov 18 bounced back to close strong on the back of bargain hunting activity.

It said the market rebound did not pose a big surprise as the market had been in the oversold zone after the recent sell down.

It said following the return of the market settlement above the 1,812 level on 18 Nov 2014, a support zone was believed to have been found between 1,800 and 1,805 for the time being.

It added that the benchmark index was thus expected to test higher ground with immediate hurdle seen at 1,820.

“A crossover of 1,820 should see the market moving towards the next resistance at 1,830. Indicator wise, the MACD is below the 9-day moving average line. 

“The analysis of overall market action on Nov 18 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,818.38 level on Nov 19,” it said.