KLCI seen sustaining gains today

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KUALA LUMPUR (March 25): The FBM KLCI is expected to sustain and extend its gains today,albeit cautiously on the back of the weaker overnight close at Wall Street as well as overall mixed sentiment at the local bourse.

Wall Street drifted down while European shares neared record highs in choppy global equities trading on Tuesday as the dollar rebounded and oil prices fell, according to Reuters.

The dollar's gains knocked the euro back below $1.10, even as yields on U.S. Treasuries eased on betting in credit markets that low inflation will persist and delay interest rate hikes by the Federal Reserve, it said.

AllianceDBS Research in its evening edition Tuesday said despite the weak down close in the preceding day, the FBM KLCI had on March 24 reversed its position to reach a high of 1,814.54 as market participants changed their game play from selling (23 Mar 2015) to buying.

It said that in the absence of strong selling interest, the benchmark index climbed back up into the 1,800 zone before settling near the day’s high of at 1,814.04 (+18.19 , +1.01%).

“In the broader market, losers outnumbered gainers with 415 stocks ending lower and 400 stocks finishing higher. That gave a market breadth of 0.96 indicating the bears were in better control with the bulls closely matched,” it said.

AllianceDBS Research said the return of the benchmark index above the 1,800 level on March 24 indicated that certain market participants did not want to see immediate change of market sentiment to the negative side.

It said a follow through selling below the previous day’s low of 1,795 level could jeopardise the buying confidence, which would then lead to further stock liquidation activity.

It said following the up close on March 24, the benchmark index is likely to test the immediate hurdle at 1,815.71 (March 19).

The research house said a crossover of 1,815.71 should see the benchmark index gearing towards the next resistance zone, 1819 – 1,826.

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

“The analysis of overall market action on March 24 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,814.54 level on March 25,” said AllianceDBS Research.