KLCI to experience flat to lower movement

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KUALA LUMPUR (May 27): The FBM KLCI is likely to experience flat to lower movement today following the overnight dip at US and most global markets, as well as the prevailing bearish sentiment at the local market.

The U.S. dollar rallied on Tuesday after a string of healthy economic data boosted near-term rate hike prospects, while Greece's financial crisis and signs of growing opposition to austerity in Spain weighed further on the euro, according to Reuters.

Stocks and commodities took a knock, as the greenback pushed higher on a solid increase in a gauge of U.S. business investment spending in April, it said.

Stocks fell 1 percent on Wall Street, weighed by the stronger dollar, which gained 1.3 percent against a basket of major currencies in its largest daily move since July 5, 2013, said Reuters.

AllianceDBS Research in ite evening edition Tuesday said that dampened by the weak down close in the preceding day, the FBM KLCI had on May 26 traded lower to a low of 1,755.09 after the opening bell as market participants continued to play on the selling side in anticipation of a lower market.

However, it said weak follow through selling pressure in the area of 1,755.09 prompted some risk taking buying interest. This lifted the benchmark index back to 1,776.07 before settling at 1,764.07 (- 3.31, - 0.19%).

“In the broader market, gainers outnumbered losers with 484 stocks ending higher and 318 stocks finishing lower. That gave a market breadth of 1.52 indicating the bulls were in control,” it said.

AllianceDBS Research said the benchmark index continued to be in a losing streak on May 26 with a loss of 68 points [(1,823 (May 18) minus 1,755 (May 26)] over the past 6 days.

The research house said some supportive buying interest may have been spotted on May 26, but sellers were still in better control over the buyers.

“Given the down close, the benchmark index is likely to test a lower level again with the immediate support zone pegged between 1,740 and 1,745.

“A fall below 1,740 could send the market down to the subsequent support at 1,700. Market resistance is seen at 1,776,” it said.  

The research house said a rise above 1,776 should see the market attempt to test the next hurdle at 1,795.

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

“The analysis of overall market action on May 26 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,755.09 level on May 27,” said AllianceDBS Research.