KUALA LUMPUR (Aug 17): The FBM KLCI is expected to remain below the pyscologically crucial 1,600-point level in line with volatile global equity markets’ sentiment, as well as tepid mood at the local market.

Equities on world bourses ended the week lower on Friday after China's currency devaluation on Tuesday shook investors, though volatility declined late in the week, suggesting markets had absorbed Beijing's surprising actions, according to Reuters.

For the week, the MSCI All World Index fell 0.4%, its second consecutive weekly decline. China's modest devaluation of its currency dominated market activity, as the yuan lost 3% on the week, and investors were left questioning whether the move will continue to pressure the Japanese yen and other Asian currencies, it said.

AllianceDBS Research in its evening edition last Friday said the FBM KLCI had on August 14 breached the 1,600 level to reach the lowest low of 1,590.57 since June 20, 2012 as market participants changed their game play pattern from buying to selling.

The research house said that under the persistent selling interest, the benchmark index was in the red throughout the trading sessions before settling off the day’s low at 1,596.82 (–24.80 , –1.53%).

“In the broader market, losers outnumbered gainers with 782 stocks ending lower and 148 stocks finishing higher. That gave a market breadth of 0.18 indicating the bears were highly in control,” it said.

AllianceDBS Research said the benchmark index failed to see a follow through buying activity on August 14 after the opening bell.

It said that as soon as the last buying order was filled at 1,626.90, selling supply poured in as market participants began to unload another portion of their stock positions in an attempt to cut their losses short.

“The downside breakout of 1,600 was unavoidable amid the looming market pessimism.

“Given the current poor market sentiment and the unfilled downside gap left behind on August 12, the benchmark index is expected to test lower level with immediate support zone, 1,550–1,570,” it said.

AllianceDBS Research said indicator wise, the MACD was below the 9-day moving average line.

“The analysis of overall market action on August 14, 2015 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,590.57 level on August 17,” said AllianceDBS Research.