KLCI may edge up but sentiment to stay lacklustre

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KUALA LUMPUR (March 18): The FBM KLCI could edge up in lacklustre trade today as investors await for the outcome of the  US Federal Reserve’s policy meeting over the next two days.

Global stocks mostly ended lower on Tuesday as investors turned their focus to the Federal Reserve's two-day policy meeting, which is being closely watched for signs of when the U.S. central bank will raise interest rates, according to Reuters.

Wall Street stocks were broadly lower, pulling back after Monday's rally, but the S&P and the Dow pared losses in afternoon trading and the Nasdaq posted gains as Apple Inc rose 1.7 percent, it said.

AllianceDBS Research in its evening edition Tuesday said that despite the down close in the preceding day, the FBM KLCI was trading firm after the opening bell on March 17 as market participants chose to play on the buying side in anticipation of a higher market.

It said the benchmark index subsequently reached a high of 1,789.40 before settling off the day’s high at 1,787.87 (+ 7.33, + 0.41%).

“In the broader market, losers outnumbered gainers with 490 stocks ending lower and 347 stocks finishing higher. That gave a market breadth of 0.70 indicating the bears were still in control,” it said.

AllianceDBS Research said that having found support at 1,774 and settled above the 1,780 level on March 16, the benchmark index went on to test higher ground in the subsequent day (March 17).

However, it said the market ran into resistance selling in the area of 1,789.

“Given the overall market actions in the last 5 days, the benchmark index appeared to be ready to test higher level again.

“This can be seen from reluctance on the part of market participants to give in to a settlement below the 1,780 level,” it said.

The research house thus said a crossover of 1,790 should see the market gearing towards the next hurdle at 1,800.

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

“The analysis of overall market action on March 17 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,789.40 level on March 18,” said AllianceDBS Research.