KUALA LUMPUR (Oct 15): Inter-Pacific Securities Sdn Bhd said after its mild retreat on Thursday, the key FBM KLCI still appears slightly overbought.
In its daily bulletin on Friday, the research house said that after testing the 1,600 level, the FBM KLCI retreated on Thursday, ending its seven-day winning streak as the slightly overbought market conditions prompted profit taking.
It said recent big movers in the plantation, construction, financial and telecommunication sectors retreated.
The research house said while the big caps dithered, most lower liners and broader market shares were stable even as market breadth turned negative.
Meanwhile, traded volumes continue to ease as the fresh buying interest waned, it said.
However, it opined that the pullback will be short-lived as the market’s undertone is still upbeat, which could provide the impetus for a quick recovery.
“This may allow the key index to end the week on a sanguine note that is also aided by the positive performance of key overseas bourses overnight.
“Nevertheless, the 1,600 level may still be a formidable level to break with valuations already fair which leaves little room for significant upsides.
“As such, the upsides may be more modest as there will be still some selling into strength actions that could limit the gains.
“Above the 1,600 resistance, the other hurdles are at the 1,608 and 1,620 levels. The supports, meanwhile, are at 1,590 and 1,580 points respectively,” it said.
Inter-Pacific said unless there is a pickup in retail participation, the broader market and lower liners are likely to stay mixed for the time being.
“There will still be rotational buying, but fresh buying is still absent for the most part and this could curtail the upside opportunities,” it said.