KUALA LUMPUR (Jan 7): The FBM KLCI is expected to trend sideways and trade range-bound today despite the strengthening buying sentiment at the local bourse due to the weakening global investor sentiment.

Stocks across the world fell on Wednesday as China fuelled fears about its economy by allowing the yuan to weaken further and after a nuclear test by North Korea added to a growing list of geopolitical worries, according to Reuters.

Brent crude futures tumbled to 11-year lows as a row between Saudi Arabia and Iran made any cooperation between major exporters to cut output even more unlikely. WTI fell below $34 a barrel to its lowest since Feb. 2009, it said.

AllianceDBS Research in its evening edition Wednesday said the FBM KLCI had on Jan 6 opened the day on a firm note which subsequently led the benchmark index to a high of 1,675.37 as market participants continued to play on the buying side in anticipation of a higher market.

It said under the persistent buying support, the benchmark index was in the green throughout the trading sessions before settling off the day’s high at 1,667.97 (up 2.27 points or 0.14%).

“In the broader market, gainers outnumbered losers with 595 stocks ending higher and 321 stocks finishing lower. That gave a market breadth of 1.85 indicating the bulls were in control,” it said.

AllianceDBS Research said the market saw buying activity on Jan 6 with higher high indicating that buyers were in better control over the sellers.

“However, the market sentiment remains weak as the downside gap left behind on Jan 4 is still unfilled.

“The market is in need of buying confidence after the recent sell-off with almost 40 points steep losses on Jan 4.

“It is thus necessary to see a consistent in-flow of supportive buying interest in the coming few days,” it said.

The research house said following the up close on Jan 6, the benchmark index is likely to test higher level again with an eye to close the downside gap.

“The support is pegged at 1,650. A fall below 1,650 would put pressure on the benchmark index down to the subsequent support at 1,640, it said.

It said that indicator wise, the MACD was above the 9-day moving average line.

“The analysis of overall market action on Jan 6 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,675.37 level on Jan 7,” said AllianceDBS Research.