Thursday 28 Mar 2024
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KUALA LUMPUR (Feb 29): The FBM KLCI is expected to stay cautious today with immediate support at the 1,650 level after the rally at most global markets faded out last Friday.

The US dollar jumped on Friday and Wall Street's stock rally faded as fresh economic data kept alive Federal Reserve rate increases, while oil prices turned negative late in the session, according to Reuters.

The S&P 500 ended slightly lower but finished the week up 1.6%. Europe's FTSEurofirst 300 stock index tallied a 1.6% rise on Friday, fueled by strength in mining shares as industrial metals such as copper and aluminium gained, it said.

AllianceDBS Research in its evening edition last Friday said despite the weak down close in the preceding day, the FBM KLCI had on Feb 26 opened the day on a positive note to form an inside day bar.

However, it said non-follow through buying interest in the area of 1,665.64 prompted pre-weekend profit taking activity.

The research house said this pushed the benchmark index down to a low of 1,658.66 before rebounding to settle at 1,663.44 (up 5.28 points or 0.32%) in the last few minutes buying of selective blue chip.

"In the broader market, losers outnumbered gainers with 492 stocks ending lower and 335 stocks finishing higher. That gave a market breadth of 0.68 indicating the bears were in control," it said.

AllianceDBS Research said the inside day bar may have indicated a pause in the game play.

"However, the price action suggested that sellers were in better control over the buyers as market participants continued to feel uncertain about the market upside after the downside violation of 1,670 on Feb 24.

"Given the last few minutes buying of selective blue chip to place the index near the day's high on Feb 26, the benchmark index is still seen vulnerable to a downward move with immediate support at 1,658," it said.

The research house said a fall below 1,658 could send the index down to the subsequent support at 1,650.

It said an ability on the part of benchmark index to stay supportive between 1,650 and 1,658 can help to instil buying confidence for subsequent attempts to test the 1,700 psychological level.

It said that indicator wise, the MACD was still marginally above the nine-day moving average line.

"The analysis of overall market action on Feb 26 revealed that buying power was weaker than selling pressure.

"As such, the FBM KLCI would likely trade below the 1,658.66 level on Feb 29," said AllianceDBS Research.

Based on corporate announcements and news flow last Friday, companies that will be in focus today may include the following: PPB Group Bhd, AirAsia Bhd, AirAsia X Bhd, Sunway Bhd and Mah Sing Group Bhd.

 

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