KUALA LUMPUR (Sept 22): Inter-Pacific Securities Sdn Bhd said while the key index’s rebound was welcomed to break the downward spell, the broad market environment remains fragile with concerns over the lingering tax and interest waiver on bank’s earnings likely to keep sentiments cautious for longer.

In its daily bulletin today, the research house said the FBM KLCI posted a mild rebound yesterday to halt its streak of losses that was helped by light bargain hunting on some of the recently beaten down index constituents.

It said among the sectors that saw renewed interest were banking and gaming stocks, but glovemakers continue to lose ground on their weaker prospects.

Inter-Pacific said with the buying largely selective, however, market breadth stayed negative as many lower liners and broader market shares were still consolidating, albeit their losses were milder.

“At the same time, positive leads from local sources are still far-and-in between that could also keep most fresh buying interest at bay.

“Meanwhile, overseas leads are also difficult to come by with concerns over Evergrande’s loan defaults keeping sentiments guarded that could also continue to keep most market players on the sidelines as they adopt a wait-and-see stance.

“Under the prevailing environment, we think the FBM KLCI is likely to drift further over the near term as it looks to find a base and we think the key index could trend within the 1,520 and 1,540 levels.

“The other support is at 1,513 points, while there is an interim resistance at around the 1,535 level,” it said.

Inter-Pacific said the lower liners and broader market shares may also be attempting to find some solace from their recent selldown, but with fresh buying still anemic, but the downside bias remains.

“Therefore, the selling and profit taking activities could still dominate trades for now and delay the prospects of a meaningful recovery,”it said.