Thursday 28 Mar 2024
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KUALA LUMPUR (March 14): The FBM KLCI is expected to stabilise next week with 1,780 points as the support level and build an upleg higher, tracking firmer global and regional markets.

The dollar powered higher yet on Friday, pressuring stocks and commodities, on expectations of a Federal Reserve interest rate hike that could slow U.S. corporate profits, according to Reuters.

The dollar index was on track for a back-to-back weekly gain of more than 2 percent, setting up its strongest two-week performance in more than six years, it said.

Stocks fell on Wall Street, with the S&P 500 set to post its third straight negative week. The index is about 3 percent below its record high set this month. Energy stocks were among the biggest losers, falling along with a steep decline in crude oil, according to Reuters.

Affin IB vice president and head of retail research Datuk Dr Nazri Khan said he expects the FBM KLCI to stabilise at 1780 support level and build an upleg higher, tracking strong showing of Wall Street and Asian regional indices.

Nazri, who is also the president of the Malaysian Association of Technical Analysts, said that on the technical front, following a week and a half of steep declines (the FBM KLCI corrected 49 points or 2.7%), the local stock index was now poised for a rebound at 1780 level.

He said the FBM KLCI saw a gap lower last Wednesday but it had since showed positive reversal action at 50-day moving average in late week session.
 

Naari said the FBM KLCI’s major driver came from a rally in technology, exporters and small cap shares (FBMAce & FBMFledgling) following a setback in the US dollar after eclipsing the 100 level overnight and ringgit depreciation to 3.6900 (down 1.5% w-o-w).

“Bursa upside is led by gains in the heavyweight shares of CIMB Group Holdings Bhd, Axiata Group Bhd, MISC Bhd and Tenaga Nasional Bhd following the latest foreign inflow and domestic fund accumulation.

“FBM KLCI Futures also appear to be stabilizing recent weakness at 1780 level with rising volume and looks poised for a corrective bounce in next week session,” he said.

Nazri said the daily stochastic indicator has already started to turn flattish on its oversold region, while the RSI indicator had also started to ease after trending down south recently.

He said these imply that the Bursa benchmark could potentially start to stabilise after its recent correction before seeking a reversal play from there.

“We see positive broad market breadth with 5 gainers as compared to 3 losers while average daily trading volume increased to 2.9 billion shares worth RM2.1 billion as compared to last week 2.4 billion shares worth RM2 billion.

“Actively traded stocks are mostly small cap stocks which include Eti Tech Corporation Bhd, Genetec Technology Bhd, Wintoni Group Bhd, Ingenuty Solutions Bhd, Xinghe Holdings Bhd, United U-Li Corporation Bhd, Nova MSC Bhd, Privasia Technology Bhd, Lee Swee Kiat Group Bhd And Hiap Huat Holdings Bhd.

“The market medium-term trend remain positive as FBMKLCI close above the 50-day moving average. The next upside area of resistance are pegged around 1800 and 1830 levels while major support hits today at 1780 and 1750 levels respectively,” he said.

Nazri said that on the stock front, he believed there were ample picks following the recent correction.

“Given the cautiously optimistic 2H2015 sentiment, we prefer blue chips that possess momentum capacity to rebound on event play after the recent sell-off.

“Aggressive investors should long index futures while conservative investors should buy our Featured Stocks namely Gamuda Bhd, MISC Bhd, IJM Corporation Bhd, IHH Healthcare Bhd, KPJ Healthcare Bhd, QL Resources Bhd, Inari Amertron Bhd, Unisem (M) Bhd, Malaysian Pacific Industries Bhd, MYEG Services Bhd, Tecnic Group Bhd, Poh Huat Resources Holdings Bhd, SCGM Bhd, Yee Lee Corporation Bhd and Ulicorp,” he said.

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