KUALA LUMPUR (Sept 18): The FBM KLCI is expected to extend its gains and test the 1,690-point level today, riding on its momentum from yesterday.

US blue-chip stocks fell in volatile trading on Thursday while bond prices jumped after the Federal Reserve decided to hold US interest rates near zero on concerns about global weakness but left the door open for a rate increase later this year, according to Reuters.

The dollar posted its biggest one-day loss in a month against a basket of currencies as the US central bank refrained after a two-day policy meeting from further spooking investors already fretting about China's slowing economy hurting the rest of the world, it said.

AllianceDBS Research in its evening edition Thursday said the FBM KLCI had on Sept 17 gapped up to cross over the 1,660 hurdle.

The research house said the benchmark index subsequently reached a high of 1,691.93 as market participants continued to play on the buying side in anticipation of a higher market.

It said under the persistent buying interest, the benchmark index was in a sea of green throughout the trading sessions before settling off the day’s high at 1,681.54 (up 34.39 points or 2.09%).

“In the broader market, gainers outnumbered losers with 672 stocks ending higher and 226 stocks finishing lower. That gave a market breadth of 2.97 indicating the bears were in control,” it said.

AllianceDBS Research said the upside gap indicated the urgency to establish stock positions.

“This upside gap had helped to create the momentum for the market to trend up in one direction with blue chips leading the pack of other stock gainers.

“The buying demand was overwhelming with the market crossing over the 50-day MA line under a high market volume of 2.24 billion shares.

“Following the upside breakout of 1,660, the benchmark index is poised to trade higher again with an eye to test the 1,700 psychological level,” it said.

The research house said the immediate market support zone is pegged between 1,656 and 1,660, adding that indicator wise, the MACD was above the nine-day moving average line.

“The analysis of overall market action on Sept 17 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,691.93 level on Sept 18,” said AllianceDBS Research.