KLCI likely to stay cautious on mixed global markets’ close

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KUALA LUMPUR (Jan 16): The FBM KLCI could trade sideways today on the back of the mixed overnight close at the global markets where European shares advanced but Wall Street fell.

Analysts’ call on the local market over the past few sessions have been mixed, with few being accurate on how the local benchmark index would behave on a daily basis.

At the global markets, Switzerland's move to jettison a three-year-old cap on the franc threw global markets into turmoil on Thursday, sending the currency and most European shares soaring while bond yields and Swiss equities tumbled, according to Reuters.

U.S. stocks closed lower, marking a fifth straight session of losses, as bank results disappointed and investors fretted over the potential impact of global economic weakness on U.S. corporate earnings, it said.

AllianceDBS Research in its evening edition Thursday said the FBM KLCI had on Jan 15 traded higher to 1,750.94 as market participants chose to play a buying game in anticipation of a higher market.

Nonetheless, it said the benchmark index was seen trading in a choppy manner in the absence of persistent buying interest, before settling at 1,745 (+2.99, +0.17%).

“In the broader market, gainers outnumbered losers with 497 stocks ending higher and 283 stocks finishing lower. That gave a market breadth of 1.75 indicating the bulls were in control,”it said.

AllianceDBS Research said a good attempt was made to hold the benchmark index above the 20-day MA line on Jan 15.

“However, the buying power ran into profit taking pressure. This can be seen from the market trading activity around the dotted line towards the closing bell.

“Given the ability of the benchmark index to stay above the 20-day MA line for the past 3 days, the market appears to be looking for opportunities to trade upward again with support zone pegged between 1,718 and 1,736,” it said.  

The research house said the overhead resistance zone was between 1,760 and 1,770.

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

“The analysis of overall market action on Jan 15 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,738.24 level on Jan 16,” said AllianceDBS Research.