KLCI seen range bound, support at 1,686

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KUALA LUMPUR (Feb 19): The FBM KLCI is seen trending range bound today with immediate support at the 1,686-point level as domestic buying sentiment stays somewhat wary.

Hopes for progress in Sino-U.S. trade talks and expectations of policy stimulus from central banks lifted world stocks to 2 1/2- month highs on Monday, though European gains were held back by concern over the outlook for auto makers, according to Reuters.

MSCI's All-Country World Index rose 0.4 percent after Japan's Nikkei closed up 1.8 percent at its high for the year and MSCI's index of Asian equities rose almost 1 percent. Shanghai blue chips surged 2.7 percent to their highest finish in more than six months., it said.

Wall Street futures suggested that U.S. stocks would maintain last week's gains when trading starts again on Tuesday, after Monday's holiday, said Reuters.

AllianceDBS Research in its evening edition Feb 18 said that despite last Friday’s down close, the FBMKLCI had on Feb 18 traded higher to 1,695.61 as market participants changed their game play to play on the buying side in anticipation of a higher market.

It said under the persistent buying interest, the benchmark index was in the green throughout the trading sessions before settling off the day’s high at 1,692.74 (up 3.91 points or 0.23%).

“In the broader market, gainers outnumbered losers with 446 stocks ending higher and 378 stocks finishing lower. That gave a market breadth of 1.17 indicating the bulls were in better control,” it said.

AllianceDBS Research said the market made a higher high on Feb 18 with the benchmark index reaching a high of 1,695.61.

“A buying attempt with an opening level of 5.09 points higher than last Friday settlement was initiated in a hope to turn the market on the upside as market participants wanted to break away from the current market state of doldrums.

“However, there was no stronger buying interest at 1,695.61.

“This gave rise a chance to aggressive market participants to sell, which pushed the market down to 1,690.19,” it said.  

The research house said at the day’s low of 1,690.19, supportive buying interest kicked in to lift the market back up.

It said following the weak up close on Feb 18, there should be selling attempt with immediate support at 1,686.

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

“As such, the FBM KLCI would likely trade below the 1,690.19 level on Feb 19,” said AllianceDBS Research.

Based on corporate announcements and news flow yesterday, stocks in focus today may include the following: Deleum Bhd, Petronas Gas Bhd, Southern Steel Bhd, Kuala Lumpur Kepong Bhd, Berjaya Land Bhd, Kossan Rubber Industries Bhd, Hong Leong Industries Bhd and Guan Chong Bhd.