KLCI expected to trend lower

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KUALA LUMPUR (April 9): The FBM KLCI is expected to trend lower today despite the higher overnight close at most global markets,

Global equity markets rose on Wednesday and European shares hit eight-year highs on a $70 billion takeover bid by Royal Dutch Shell, while U.S. shares pared gains after the largest U.S. crude inventory build in 14 years slammed oil prices, according to Reuters.

U.S. Energy Information Administration data showed stockpiles of U.S. crude surged nearly 11 million barrels last week in their largest weekly build since March 2001, it said.

AllianceDBS Research in its evening edition Wednesday said that having traded to a high of 1,856.51, the FBM KLCI had on April 8 traded within previous day’s range to form an inside day bar as market participants decided not to stage an immediate follow through buying support.

It said in the absence of buying interest, the benchmark index was in the red throughout the trading sessions before settling near the day’s low at 1,850.31 (-6.20 , -0.33%).

“In the broader market, gainers outnumbered losers with 427 stocks ending higher and 372 stocks finishing lower. That gave a market breadth of 1.14 indicating the bulls were in control,” it said.

AllianceDBS Research said the inside day indicate a breather in the game play.

The research house said the market pause did not come as a surprise as the benchmark had already chalked up 82 points in the last 16 days [1,856 (7 Apr 2015) minus 1,774 (16 Mar 2015)] or 4.62% gains.

Moreover, it said the benchmark index was fast approaching the immediate hurdle at 1,865.

“This raised certain amount of concerns among the market participants with winning trades and could be observed from the near day’s low settlement at 1,850.31.

“Given the down close, the market is expected to consolidate further in the coming few days in an attempt to balance out the demand & supply forces created in the recent days,” it said.

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

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

“As such, the FBM KLCI would likely trade below the 1,848 level on April 9,” said AllianceDBS Research.