KLCI to start week on cautious note

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KUALA LUMPUR (Dec 15): The FBM KLCI is expected to commence the week on a cautious and weaker note today in line with the less-than-encouraging close at most global markets last Friday.

Oil's relentless slide pounded energy stocks and currencies exposed to crude exports on Friday, doused the appetite for riskier assets and pushed investors into the safety of government debt despite strong U.S. consumer sentiment, according to Reuters.

The Dow industrials and major European equity indexes posted their biggest weekly losses in three years, as shares in Europe fell more than 2 percent and stocks on Wall Street, with the exception of Nasdaq, fell nearly as much, it said.

AllianceDBS Research in its evening edition last Friday said that dampened by the down close in the preceding day, the FBM KLCI had on Dec 12 traded lower to settle at the day’s low of 1,732.99 (-11.58 , -0.66%) as market participants continued to play on the selling side in anticipation of a lower market.

“In the broader market, losers outnumbered gainers with 690 stocks ending lower and 178 stocks finishing higher. That gave a market breadth of 0.25 indicating the bears were in control,” it said.  

AllianceDBS Research said the benchmark index gave back all of what it gained on Dec 10 in the last 2 days.

It said gollowing the down close on Dec 12, the market has only registered 3 days of up close out of the 12 market days since Nov 27, 2014.

“With the recent sharp drop, many risk adverse market participants have seen their stocks in hands losing 30% to 40% or more of the value in such short span of time.

“In fact, the market sentiment was so weak that there were no market participants seen willing to buy aggressively into the market at this juncture for fear of further decline,” it said.

The research house said given the market setup in the last 3 days, it was crucial for the benchmark index to stay supportive at the 1,730 level.

It said a fall below 1,730 could send the market down to the 1,700 psychological level.

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

“The analysis of overall market action on Dec 12 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,732.99 level on Dec 15,” said AllianceDBS Research.