KUALA LUMPUR (March 28): The FBM KLCI could extend its consolidation phase today with immediate support seen at the crucial 1,700-point level.
Stocks in Thailand and Vietnam edged lower on Friday amid a fall in Asia and a strong US dollar, while Malaysia hit a one-week low after inflation spiked in February, according to Reuters.
AllianceDBS Research in its evening edition last Friday said that dampened by the down close in the preceding day, the FBM KLCI had on March 25 broken the 1,700 support to reach an intraday low of 1,699.76 as market participants continued to play on the selling side in anticipation of a lower market.
It said that under the persistent selling interest, the benchmark index languished in the red throughout the trading sessions before settling off the day's low at 1,703.79 (down 11.74 points or 0.68%) ahead of weekend.
"In the broader market, losers outnumbered gainers with 465 stocks ending lower and 295 stocks finishing higher. That gave a market breadth of 0.63 indicating the bears were in control," it said.
AllianceDBS Research said the market witnessed another selling day on March 25 with benchmark index making lower low for two consecutive days.
"Sellers were in control of the game play, this can be seen from the intraday downside violation of the 1,700 support.
"The profit taking activity is inevitable given the fact that the benchmark index had risen by 37 points measuring from the low of 1,689 (March 16) to the high of 1,726 (March 23) in five market days.
"Moreover, locking in good profit on winning stocks has never been a wrong decision," it said.
The research house said that on the other hand, buyers were unwilling to buy into the market on an immediate basis for fear of negative external market development.
It said following the down close on March 25, the market is likely to trade lower again with immediate support remains at 1,700.
It said a fall below 1,700 could send the market down to the subsequent support zone, 1,685–1,690, adding that indicator wise, the MACD was still marginally above the nine-day moving average line.
"The analysis of overall market action on March 25 revealed that buying power was weaker than selling pressure.
"As such, the FBM KLCI would likely trade below the 1,699.76 level on March 28," said AllianceDBS Research.
Based on corporate announcements and news flow last Friday, companies that may be in focus today could include the following: Elsoft Research Bhd, Turiya Bhd, Trive Property Group Bhd, EG Industries Bhd, Chemical Company of Malaysia Bhd, Destini Bhd, SapuraKencana Petroleum Bhd, Talam Transform Bhd, RGB International Bhd and Sunsuria Bhd.