KLCI likely to remain below 1,700-level on global market woes

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KUALA LUMPUR (Oct 28): The FBM KLCI is likely to remain below the crucial 1,700-point level today in line with the weaker overnight close at most markets, aheadof a U.S. Federal Reserve policy statement.

Global equity markets retreated for a second straight session on Tuesday as investors were cautious ahead of earnings from Apple and a U.S. Federal Reserve policy statement, while crude prices slumped to multi-week lows on growing oversupply concerns, according to Reuters.

The S&P 500 closed lower as investors awaited Apple earnings after the closing bell in an effort to gauge global demand. Investors were also bracing for the conclusion of the Fed's two-day meeting on Wednesday for signs on the timing of an interest rate hike, it said.

AllianceDBS Research in its evening edition Tuesday said that after opening the day on a weak note, the FBM KLCI dipped below the 1,695 support to a low of 1,694.22 as market participants chose to play on the selling side in anticipation of a lower market.

It said that under the persistent selling pressure, the benchmark index was in the red throughout the trading sessions before settling near the day’s low at 1,696.95 (down 9.84 points or  0.58%).

“In the broader market, losers outnumbered gainers with 588 stocks ending lower and 269 stocks finishing higher. That gave a market breadth of 0.45 indicating the bears were firmly in control,” it said.

AllianceDBS Research said the benchmark index continued to register lower high and lower low for 3 consecutive days with sellers still in better control over the buyers.

“However, the market did not get far below the 1,695 support. Given the weak down close at 1,696.95 on Oct 27, the market is expected to decline further with high probability of breaking below the 1,695 support.

“A fall below 1,695 could send the benchmark index down to the next support at 1,680,” it said.

The research house said the overhead resistance was pegged at 1,730, adding that indicator wise, the MACD was below the 9-day moving average line.

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

"As such, the FBM KLCI would likely trade below the 1,694.22 level on Oct 28,” said AllianceDBS Research.