KLCI to see more upside this week

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KUALA LUMPUR (Oct 27): Stocks on Bursa Malaysia are expected to experience more upside on bargain-hunting interest ahead of the October month end closing and after the Budget 2015.

Global equity markets rose on Friday after strong corporate results from Microsoft and Procter & Gamble and reduced concerns over the possible spread of Ebola boosted U.S. shares and kept safe-haven U.S. Treasuries prices stable, according to Reuters.

Affin Hwang IB vice president and head of retail research Dr Nazri Khan said that he expects the FBM KLCI to stabilize its downside momentum and quietly grind higher, taking advantage of the Wall Street positive performance, seasonally bullish Nov-Dec-January quarter of the year, positive Budget play and the cheap bargains in the Malaysian blue chips after eight straight weeks of correction.

Nazri, who is also the president of the Malaysian Association of Technical Analaysts, said that fundamental wise, Malaysia was a low beta market with a relatively large fund management industry, lower foreign shareholding and fair valuation, explaining that any foreign selldown should be well absorbed to limit impact of outflow pressure from rising interest rate.

“Meanwhile, on the technical front, we believe FBMKLCI has tested 1780 level successfully and is now preparing a base platform to jump higher after making a bulling V bottom reversal below 200 moving average last week,” he said.

Meanwhile, Alliance DBS Research in its evening edition last Friday said that led by the up close in the preceding day, the FBM KLCI had on 24 Oct 2014 only traded down to a low of 1,810.02 as market participants chose not to play an aggressive selling game.

It said that in the absence of stronger selling pressure at 1,810.02, supportive buying interest lifted the benchmark index to a high of 1,819.23 in the last few minutes buying of selective blue chip stocks before closing near the day’s high at 1,818.86 (+8.18, +0.45%).  

It said the analysis of overall market action on 24 Oct 2014 revealed that buying power was stronger than selling pressure.

“As such, FBM KLCI would likely trade above the 1,819.23 level on Oct 27, 2014,” it said.