KUALA LUMPUR (Dec 21): The FBM KLCI is expected to take a pause today in line with the sharp decline last Friday at major global markets, ahead of a holiday-shortened trading week that could see lacklustre sentiment at the local bourse.

Global equity markets fell sharply on Friday as slumping oil prices raised concerns about slower growth, while the dollar slipped against the yen on views the Bank of Japan may not ease policy as much as expected, according to Reuters.

Trading in crude oil and the bond market was volatile, while stock investors were skittish in the wake of the euphoria that followed the U.S. Federal Reserve's first interest rate hike in almost a decade on Wednesday, it said.

AllianceDBS Research in its evening edition last Friday said that despite the strong up close in the preceding day, the FBM KLCI had on Dec 18 traded within previous day’s range to form an inside day bar as market participants chose not to stage an immediate follow through buying support.

It said that in the absence of stronger buying interest, the benchmark index came under profit taking activity throughout the trading sessions before settling near the day’s low at 1,643.90 (-12.62 , -0.76%) ahead of weekend.

“In the broader market, losers outnumbered gainers with 498 stocks ending lower and 335 stocks finishing higher. That gave a market breadth of 0.67 indicating the bears were in control,” it said.

AllianceDBS Research said that having shot up 22 points on Dec 17, the FBM KLCI took a breather in the subsequent day.

“The lower high on Dec 18 may be disappointing, but a small pullback is still viewed healthy as it helps to balance out the disequilibrium created between the demand and supply forces in recent days.

“Following the down close on Dec 18, the market is likely to consolidate between 1,635 and 1,657 in the coming few days.

“A fall below 1,635 would put pressure on the benchmark index down to the subsequent support at 1,628,” it said.

The research house however said that a crossover of 1,657 should lift the index to the next hurdle at 1,663, adding that indicator wise, the MACD was below the 9-day moving average line.

“The analysis of overall market action on Dec 18 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,642.83 level on Dec 21,” said AllianceDBS Research.