KLCI likely to edge up cautiously on resurgent buying interest

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KUALALUMPUR (Jan 14): The FBM KLCI is likely to edge upward in cautious trade today as local buying interest appears to have resumed at the local market despite the volatile sentiment at US and most global markets on continued weakness in crude oil prices.

The U.S. stock market closed lower for a third straight session on Tuesday, reversing earlier gains as continued weakness in oil spurred further selling in the energy sector, while the U.S. dollar rose on hopes for stimulus from the European Central Bank, according to Reuters.

The day's trade was volatile, with the S&P 500 moving between a gain of 1.4 percent and a drop of 1 percent. The benchmark index ended off its lows of the day, but eight of the 10 primary index industries finished in negative territory, it said.

Brent crude fell 0.7 percent, approaching a near six-year low as the United Arab Emirates defended OPEC's decision not to cut output and traders wondered when a six-month-long price rout might end, said Reuters.

AllianceDBS Research in its evening edition Tuesday said that led by the up close in the preceding day, the FBM KLCI had on Jan 13 traded higher to 1,750.16 as market participants continued to play on the buying side in anticipation of a higher market.

It said that inder the stronger buying interest, the benchmark index held its position near the high end throughout the trading sessions before settling near the day’s high at 1,748.90 (+ 13.82 , + 0.80%).

“In the broader market, gainers outnumbered losers with 502 stocks ending higher and 313 stocks finishing lower. That gave a market breadth of 1.60 indicating the bulls were in control,” it said.

AllianceDBS Research said that having registered up close for 3 consecutive days, the benchmark index went on to stay in the green with a crossover of the 1,743 hurdle on Jan 13.

It said the higher high and higher low indicated that buyers were in control of the game play.

The research house said that following the up close, the market was seen in position to test higher level again with immediate overhead resistance at 1,758.

It said the support was at 1,743.

“A fall below 1,743 would put pressure on market down to the subsequent support zone, 1,718 - 1,735. Indicator wise, the MACD is above the 9-day moving average line.

“The analysis of overall market action on Jan 13 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,750.16 level on Jan 14,”said AllianceDBS Research.