KLCI to trend sideways, immediate hurdle at 1,730

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KUALA LUMPUR (Dec 6): The FBM KLCI is expected to trend sideways today with immediate hurdle seen at 1,730 points.

Copper prices fell steeply to their lowest point in two months on Tuesday, while technology stocks rebounded following a rotation away from the high-flying group as investors assessed a U.S. tax-cut proposal, according to Reuters.

Copper lost 4.35 percent to $6,529.00 a tonne as inventories rose, its biggest single-session decline in more than two years. Other metals, such as nickel and zinc , also fell, it said.

On Wall Street, the Dow Jones Industrial Average fell 19.99 points, or 0.08 percent, to 24,270.06, the S&P 500 gained 1.99 points, or 0.08 percent, to 2,641.43 and the Nasdaq Composite added 33.37 points, or 0.49 percent, to 6,808.73, said Reuters.

AllianceDBS Research in its evening edition Tuesday said that dampened by the down close in the preceding day, the FBM KLCI had on Dec 5 traded lower to 1,708.48 as some market participants continued to play on the selling side in anticipation of a lower market.

However, it said non-follow through selling pressure in the area of 1,708.48 prompted supportive buying interest to chip in.

It said this pulled the benchmark index up before settling at the day’s high of 1,724.84 (up 11.71 points or 0.68%) in the last few minutes buying of selective blue chip stocks.

“In the broader market, losers outnumbered gainers with 624 stocks ending lower and 298 stocks finishing higher. That gave a market breadth of 0.47 indicating the bears were in control,” it said.

AllianceDBS Research said the market made lower low on Dec 5 with the benchmark index slipping below the 1,713 level again.

“A selling attempt was initiated on opening bell at 1,708.48 with an intention to trigger a sell down after 2 consecutive days’ of down close (Nov 30 & Dec 4), but there was no follow through selling pressure to push the benchmark index lower.

“This showed that many market participants were unwilling to be aggressive in the selling game on an immediate basis even the current market environment was still seen in a bearish mood.

“Thus, the fall below the 1,713 level was believed to be a test carried out by certain market participants to gauge the availability of selling pressure in the market, which can be seen from the return of the benchmark index above the 1,713 on settlement basis on Nov 28, Dec 4 & 5,” it said.  

The research house said a stabilisation platform must first be built in the area of 1,713 with positive up closes in the coming few days before we can see a turnaround.

It said following the up close on Dec 5, there should be buying attempt with immediate hurdle at 1,730. 

“The analysis of overall market action on Dec 5 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,724.84 level on Dec 6,” said AllianceDBS Research.

Based on corporate announcements and news flow yesterday, companies in focus on today may include: IJM Corp Bhd, Hibiscus Petroleum Bhd, George Kent (M) Bhd, Bison Consolidated Bhd, YTL Corp Bhd, Syarikat Takaful Malaysia Bhd, NetX Holdings Bhd, Cahya Mata Sarawak Bhd, Prestariang Bhd, Pharmaniaga Bhd, Axis Real Estate Investment Trust (Axis-REIT), Advance Synergy Bhd and AppAsia Bhd.