KLCI may extend rally, but profit taking could curb gains

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KUALA LUMPUR (March 20): The FBM KLCI may extend its positive run today, but gains could be curbed on teh back of the overnight retreat at the US markets.

U.S. stocks ended mostly lower on Thursday while the dollar resumed its upward trend in a broad rally as investors resumed a bullish stance on the greenback, according to Reuters.

The activity was largely a retreat from Wednesday's heavy move into riskier assets like stocks and oil, after the Federal Reserve's policy statement struck a more dovish tone than investors had anticipated, it said.

The dollar rebounded from its biggest one-day fall against the euro and sterling in six years. The euro fell more than 2 percent on Thursday, continuing a downward slope that has dragged the currency down more than 20 percent against the dollar since mid-2014, said Reuters.

AllianceDBS Research in its evening edition Thursday said that led by the up close in the preceding day, the FBM KLCI had on March 19 overcome the 1,800 level to reach a high of 1,815.71 as market participants continued to play on the buying side in anticipation of a higher market.

It said that under the good supportive buying interest, the benchmark index was green throughout the trading sessions before settling off the day’s high at 1,809.13 (+11.56, +0.64%).

 “In the broader market, gainers outnumbered losers with 476 stocks ending higher and 336 stocks finishing lower. That gave a market breadth of 1.41 indicating the bulls were in control,” it said.

AllianceDBS Research said the benchmark index rose beyond the 1,810 level to the high of 1,815.71 on March 19, this was mainly due to the buying confidence created when the market crossed over 1,800.

However, it said weak follow through buying in the area of 1,815 prompted profit taking activity.

The research house said following the market settlement below the 1,810 level, the benchmark index was expected to trade between 1,800 and 1,819 in the coming few days.

It said a crossover of the 1,815 level again should see a test of next overhead resistance at 1,826.

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

“The analysis of overall market action on March 19 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,815.71 level on March 20,” said AllianceBDS Research.