Friday 29 Mar 2024
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KUALA LUMPUR (Nov 30): The FBM KLCI is expected to extend its consolidation mode today in line with the weaker close at most global markets last Friday.

Chinese shares slumped 5 percent on Friday, hit by regulatory and industrial sector worries, but the declines did not carry through to other major equity markets, which ended modestly lower, according to Reuters.

The Shanghai Composite index and the CSI300 both registered their biggest one-day drops in more than three months on signs that the country's securities regulator was clamping down anew on leveraged buying. China also reported a 4.6 percent drop in profits among large industrial firms, it said.

AllianceDBS Research in its evening edition last Friday said that after opening the day on a weak note, the FBM KLCI traded within previous day’s range on Nov 27 to form an inside day bar as market participants chose to play a conservative game.

The research house said that in the absence of stronger selling pressure, the benchmark index was hovering around previous day’s settlement before closing at 1,682.59 (down 0.50 points or 0.03%) ahead of weekend.

“In the broader market, losers outnumbered gainers with 635 stocks ending lower and 292 stocks finishing higher. That gave a market breadth of 0.45 indicating the bears were in control,” it said.

AllianceDBS Research said the inside day bar indicated a pause in the game play with buyers and sellers reluctant to make a greater commitment on their part.

“Market participants basically saw no good trading opportunity as buying demand selling supply were at “balanced” point throughout most of the trading sessions.

“The market rebound from the low to close near the day’s high at the end of the market in the last 2 days may have shown the availability of buying interest in the area of 1,670.

“However, this supportive buying force was seen unwilling to be on a more aggressive side at this juncture for fear of carrying excessive trading risk over the weekend,” it said.

The research house said following the near day’s high down close on Nov 27, the benchmark index is expected to move between 1,670 and 1,688 in the next few days.

It said a crossover of 1,688 again should see the benchmark index moving towards the next resistance zone, 1,695 – 1,700, adding that indicator wise, the MACD was above the 9-day moving average line.

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

“As such, the FBM KLCI would likely trade above the 1,684.63 level on Nov 30,” said AllianceDBS Research.

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