KLCI expected to trade above the 1,800 level today

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KUALA LUMPUR (March 23): The FBM KLCI is expected to build an upleg higher and stay above the 1,800 level today on improved local buying sentiment.

The U.S. dollar fell sharply on Friday and posted its biggest weekly decline against the euro in more than three years, helping to drive a rally in Wall Street stocks and crude oil, according to Reuters.

The Nasdaq posted its highest close in 15 years on Friday and had a weekly gain of 3.2 percent, it said.

Riskier assets like equities had a strong week in general, largely driven by the Federal Reserve's policy statement on Wednesday, which struck a more dovish tone than investors had expected. The Fed appeared to argue against an interest rate hike in June, said Reuters.

AllianceDBS Research in its evening edition last Friday said despite the up close in the preceding day, the FBM KLCI had on March 20 traded within previous day’s range to form an inside day bar as market participants chose not to stage an immediate follow through buying support.

It said that in the absence of stronger buying interest, the benchmark index was in the red throughout the trading sessions before settling off the day’s low at 1,803.65 (- 5.48, - 0.30%).

“In the broader market, losers outnumbered gainers with 471 stocks ending lower and 325 stocks finishing higher. That gave a market breadth of 0.69 indicating the bears were in control,” it said.

AllianceDBS Research said the inside day indicated a pause in the game play.

It said the benchmark index may have dipped below the 1,800 level on March 20, but it did not go far down.

It explained this could be seen from the market settlement at 1,803.65.

“Given the way this market behaved in the last 2 days, the benchmark index is expected to trade between 1,798 and 1,815 in an attempt to consolidate its position further.

“A fall below 1,798 would put pressure on the market down to the subsequent support zone, 1789 – 1,792,” it said.

However, the research house said a rise above 1,815 on close should see a test of recent high of 1,826 (March 4).

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

“The analysis of overall market action on March 20 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,806.90 level on March 23,” said AllianceDBS Research.