KUALA LUMPUR (Sept 15): The FBM KLCI is expected to extend its gains today, following up from its rally on Monday boosted by the government injection of RM20 billion into a state investment firm to shore up the stock market.

Having said that, the local market may turn cautious on some mild profit taking after global equities slipped overnight on Monday.

Stocks in major markets fell on Monday and oil prices fell as investors positioned for a Federal Reserve meeting this week that could see the US central bank raise interest rates for the first time in nearly a decade, according to Reuters.

Further weighing on risk assets, growth in China's investment and factory output missed forecasts in August, adding to softer data that raised the chances that economic growth may dip below 7% in the third quarter and for the first time since the global financial crisis, it said.

AllianceDBS Research in its evening edition Monday said the FBM KLCI had on Sept 14 traded down to 1,600.70 after the opening bell as some market participants chose to profit take in anticipation of a lower market.

However, it said the inability of the benchmark index to fall below the 1,600 level saw the supportive buying interest which lifted the market to a high of RM1,645.49 before settling off the day’s high at 1,639.63 (up 36.03 or 2.25%).

“In the broader market, gainers outnumbered losers with 470 stocks ending higher and 342 stocks finishing lower. That gave a market breadth of 1.37 indicating the bulls were in control,” it said.

AllianceDBS Research said the lower low followed by a higher high on Sept 14 indicated that buyers were overwhelming.

“The strong rebound from the day’s low of 1,600.70 to 1,645.49 was indeed very encouraging given the current weak market sentiment.

“Something good about the market must have happened with some strong positive catalysts believed to be flowing through to stir up the sudden buying interest.

“There were two reasons for the market rally on Sept 14: (1) The non-availability of much selling pressure in the area of 1,600 level; (2) The willingness on the part of buyers to pay up the market to get their buying orders done.

“Following the strong run up with a gain of 36 points, the market is expected to test higher level again with immediate hurdle at 1,646,” it said.

The research house said a crossover of 1,646 would see the market gearing towards the next resistance zone, 1,656 to 1,660.

It said the immediate support zone is pegged between 1,615 and 1,621, adding that the indicator wise, the MACD was above the nine-day moving average line.

“The analysis of overall market action on Sept 14 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,645.49 level on Sept 15,” said AllianceDBS Research.