KUALA LUMPUR (Sept 7): The FBM KLCI is expected to trend lower today in line with decline last Friday at major global markets, and as sentiment at the local bourse remains jittery with the weakening local currency as well as still volatile crude oil prices.

Whilst there could be some pockets of buying opportunity from recently battered stocks, it may not entirely sufficent to lift the local index above the pyschlogically crucial 1,600-point level.

Stocks on major markets fell on Friday, closing out another tough week for equity markets, after the monthly U.S. employment report failed to provide a clear signal on the likelihood of the first Federal Reserve interest rate rise for nearly a decade later this month, according to Reuters.

The U.S. added 173,000 jobs in August, fewer than expected, but job gains in prior months were revised higher and the unemployment rate dropped to a seven year low at 5.1 percent, it said.

AllianceDBS Research in its evening edition last Friday said that despite the up close in the preceding day, the FBM KLCI had on Sept 4 traded lower to 1,587.61 as market participants changed their game plan to selling instead of staging a follow through buying support.

It said under the persistent selling pressure, the benchmark index was in the red throughout the trading sessions before settling off the day’s low at 1,589.16 (down 13.59 points or 0.85%) ahead of weekend.

“In the broader market, losers outnumbered gainers with 452 stocks ending lower and 324 stocks finishing higher. That gave a market breadth of 0.71 indicating the bears were in control,” it said.

AllianceDBS Research said the lower low on Sept 4 was a little surprise following the positive settlement above the 1,600 zone in the previous day.

It said the non-follow through buying after a flattish opening suggested that market participants were reluctant to play an aggressive buying game in view of the limited upside from 1,600 to the immediate hurdle at 1,613.

“There was an intensified selling activity when the benchmark index dipped below the 1,600 level as market participants chose to protect their trading capital for fear of further decline.

“Given the weak down close, the market is thus likely to test lower level again with immediate support at 1,580.

“A fall below 1,580 would see further decline to the subsequent support at 1,550,” it said.

The research house said that indicator wise, the MACD was still above the 9-day moving average line.

“The analysis of overall market action on Sept 4 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,587.61 level on Sept 7,” said AllianceDBS Research.