KLCI to ease, consolidate further

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KUALA LUMPUR (May 12): The FBM KLCI is expected to ease and consolidate further today in line the overnight close at most global markets.

Global equity markets eased on Monday on a dip in energy shares and fears a resolution to Greece's financial woes is not in sight, leading the euro to weaken against the dollar, according to Reuters.

A cut in Chinese interest rates initially lent support to Asian and some European shares, especially miners, as China is the world's biggest consumer of copper and other metals, it said.

AllianceDBS Research in its evening edition Monday said that the FBM KLCI had on May 11 traded lower to 1,803.57 after a higher opening level.

The research house said that in the absence of stronger buying interest, the benchmark index was in the red throughout the afternoon trading session before settling near the day’s low at 1,805.49 (- 2.16 , - 0.12%).

“In the broader market, losers outnumbered gainers with 484 stocks ending lower and 342 stocks finishing higher. That gave a market breadth of 0.70 indicating the bears were in control,” it said.

AllianceDBS Research said the benchmark index was earlier expected to trade higher than 1,814.28 on May 11.

However, it said the market only carried the benchmark index to a day’s high of 1,814.24 as market participants had chosen to be conservative on the buying side.

The research house said the weak buying power did not help in creating a comfortable trading environment for the long position holders.

This subsequently led to stock liquidation activity.

“Following the weak down close on 11 May 2015, the benchmark index is likely to test the immediate support at 1,800.

“A fall below 1,800 would put pressure on the market down to the subsequent support at 1,770,” it said.

The research house said the overhead resistance zone was pegged between 1,824 and 1,830.

It said that indicator wise, the MACD was below the 9-day moving average line.

“The analysis of overall market action on May 11 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,803.57 level on May 12,” said AllianceDBS Research.