KLCI expected to trend lower amidst weaker investor sentiment

-A +A

KUALA LUMPUR (May 28): The FBM KLCI is expected to trend lower amidst choppy trade today despite the overnight higher close at the US and most global markets as local sentiment remains bearish given the lack of fresh catalysts.

Sentiment at the local market has also take a beating given the weaker than expected corporate earnings reported thus far.

Equities markets rose on Wednesday, lead by gains in European stocks, and the euro edged up on signs, later dismissed, that Greece and its creditors were drafting an agreement that would provide Athens much-needed debt relief, according to Reuters.

U.S. equities also climbed on the news on Greece, with the Nasdaq posting a record closing high, it said.

AllianceDBS Research in its evening edition Wednesday said the FBM KLCI had on May 27 slid below 1,750 to a low of 1,749.78 as market participants continued to play on the selling side in anticipation of a lower market.

The research house said that in the absence of stronger supportive buying interest, the benchmark index was in the red throughout the trading sessions before settling off the day’s low at 1,755.05 (- 9.02, - 0.51%).

“In the broader market, losers outnumbered gainers with 506 stocks ending lower and 274 stocks finishing higher. That gave a market breadth of 0.54 indicating the bears were in control,” it said.

AllianceDBS Research said the benchmark index made lower low for 7 consecutive days since it traded to a day’s high of 1,823 on May 18.

It said sellers continued to be the dominant force in the game play with buyers still seen unwilling to lend a supportive hand at this juncture for fear of further declines.

“Over the past 7 market days, the market had registered 6 down closes with only 1 up close.

“This weak market sentiment is expected to drive the benchmark index lower again with immediate support zone seen between 1,740 and 1,745,” it said.

The research house said a fall below 1,740 could send the market down to the subsequent support at 1,700.

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

“The analysis of overall market action on May 27 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,749.78 level on May 28,” said AllianceDBS Research.