KUALA LUMPUR (Nov 2): The FBM KLCI is likely to start November on a muted note in line with the global markets that were little changed last Friday.
Shares in major markets were little changed on Friday, on track to close their best month in four years, boosted in part by accommodative monetary policies in the euro zone and Japan, according to Reuters.
Concern over the prospect of higher borrowing costs in the United States as the Federal Reserve prepares to tighten interest rates has been partly offset by a slide in energy prices. Brent crude is on track to gain just over 1% in October, after falling 24% in the third quarter, it said.
AllianceDBS Research in its evening edition last Friday said the FBM KLCI had on Oct 30 traded marginally lower to 1,663.76 as market participants continued to play on the selling side in anticipation of a lower market.
The research house said in the absence of good quality supportive buying interest, the benchmark index was in the red throughout most of the trading sessions before settling near the day’s low at 1,665.71 (down 1.27 points or 0.08%) ahead of weekend.
“In the broader market, gainers outnumbered losers with 451 stocks ending higher and 396 stocks finishing lower. That gave a market breadth of 1.13 indicating the bulls were in control,” it said.
AllianceDBS Research said the benchmark index fell further to register another day of lower low on the last trading day of October 2015.
“The lower low on Oct 30 did within expectation because market participants could not find any compelling reason to buy into the market on an immediate basis.
“In the absence of catalyst to trigger a positive market development, the minority well-informed knowledgeable traders had again chosen to further lock in another portion of gains on their winning trades or to stay on the sidelines.
“These traders apparently were either still waiting patiently for the market to turn up or focusing on the possible influences around the buying-selling relationship in an attempt to determine where the market is likely to reverse from here,” it said.
AllianceDBS Research said given the market trading patterns in recent days, market movement is expected to test the next support zone, 1,635 – 1,640 with hurdle pegged at 1,675.
The research house said that indicator wise, the MACD was below the 9-day moving average line.
“The analysis of overall market action on Oct 30 revealed that buying power was weaker than selling pressure.
“As such, the FBM KLCI would likely trade below the 1,663.76 level on Nov 2,” said AllianceDBS Research.