KLCI to consolidate further on weaker local risk appetite



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KUALA LUMPUR (Nov 14): The FBM KLCI is likely to continue to consolidate further today, on the back of still cautious investors’ risk appetite and weaker buying sentiment at the local market.

At the global markets, U.S. stock prices held firm on Thursday after the Dow and Standard & Poor's 500 reached record intraday highs, while crude fell below $80 a barrel for the first time in four years on further signs of a slowdown in China's economy, according to Reuters.

Brent crude, which has fallen more than 30 percent since June, settled down $2.46 or 3.1 percent at $77.92 a barrel, while U.S. oil futures settled down $2.97 or 3.85 percent at $74.21, it said.

Data from Beijing showed below-forecast factory output and investment growth at a near-13-year low, reinforcing signs that the world's second-biggest economy would have its weakest growth in almost 24 years this year, said Reuters.

AllianceDBS Research in its evening edition Thursday said that dampened by the weak down close in the preceding day, the FBM KLCI had on Nov 13 broken the 1,812 level to reach a low of 1,810.73 as market participants continued to play on the selling side in anticipation of a lower market.

It said that under the greater selling pressure, the benchmark index kept its position near the low end throughout most of the trading sessions before settling off the day’s low at 1,815.81 (- 0.43 , -0.02%).  

“In the broader market, losers outnumbered gainers with 553 stocks ending lower and 245 stocks finishing higher. That gave a market breadth of 0.44 indicating the bears were in control,” it said.

The research house said the FBM KLCI continued its losing streak with 8 down closes and only 1 up close over the past 9 days.

It said sellers were in good control of the game play since Nov 3.

It added that buyers had chosen to be on the defensive side for fear of being caught on the wrong side of the market as the benchmark index began to slide.

AllianceDBS Research said the downside penetration of 1,812 [50% retracement of the rise from 1,766 (17 Oct 2014) to 1,858 (3 Nov 2014)] followed by a close above the 1,812 level showed that sellers were unwilling to aggressively sell down the market at this juncture.

“This gave rise to some bargain hunting activity by more aggressive buyers,” it said.

The research house said a fall below 1,812 on close basis would put pressure on the market down to the 1,800 psychological level.

Indicator wise, the MACD is below the 9-day moving average line, it said.

“The analysis of overall market action on Nov 13 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,810.73 level on Nov 14,” it said.