KUALA LUMPUR (Sept 9): The FBM KLCI is expected to snap its losing streak and edge upward today in line with the overnight global rally and attempt to breach the 1,600-psychological level.

Stock markets worldwide rallied on Tuesday on hopes of more stimulus measures in China and on strong German trade data, while Brent crude oil prices also rose, according to Reuters.

China's imports shrank far more than expected in August, falling for the 10th straight month, though exports fell less than expected. Analysts said the imports data could lead to further policy easing from the Chinese government in coming months, it said.

AllianceDBS Research in its evening edition Tuesday said despite the down close in the preceding day, the FBM KLCI had on Sept 8 opened the day on a positive note.

The research house said the benchmark index subsequently filled the downside gap left behind on Sept 7 with a high of 1,594.91 as market participants chose to play on the buying side in anticipation of a higher market.

It said in the absence of stronger selling interest, the benchmark index was in the green post afternoon session before settling off the day’s high at 1,587.12 (up 4.27 points or 0.27%).

“In the broader market, gainers outnumbered losers with 547 stocks ending higher and 243 stocks finishing lower. That gave a market breadth of 2.25 indicating the bulls were in control,” it said.

AllianceDBS Research said the closure of the downside gap left behind on Sept 7 indicated that the gap was insignificance, and market participants were willing to take the risk on the buying side.

“Following the market rebound to settle above the 1,580 level on Sept 7 and the fill of downside gap on Sept 8, the market is seen making attempt to reverse its position to the upside after the recent decline from the high of 1,660 (Sept 1) to the low of 1,567 (Sept 7).

“The immediate resistance zone is pegged between 1,600 and 1,605 with support at 1,580,” it said.  

The research house said indicator wise, the MACD was above the 9-day moving average line.

“The analysis of overall market action on Sept 8 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,594.91 level on Sept 9,” said AllianceDBS Research.