KLCI to stay listless on lack of fresh catalysts

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KUALA LUMPUR (April 29): The FBM KLCI is expected to remain listless today given the still cautious local investor sentiment despite the modest performance at Wall Street and weaker global markets, given the absence of any catalysts at the local bourse.

Two of three major U.S. stock indexes rose modestly on Tuesday as Merck posted strong earnings and IBM raised its dividend, while European stocks slid on weak corporate results and oil prices were flat to lower on expectations that U.S. crude stockpiles have reached record highs, according to Reuters.

Merck shares jumped more than 5 percent after the U.S. drugmaker beat quarterly earnings estimates. IBM shares rose 1.9 percent and were the biggest positive influence on the Dow after the company hiked its quarterly dividend by 18 percent. Losses in Apple shares weighed on the Nasdaq, it said.

AllianceDBS Research in its evening edition Tuesday said that dampened by the weak down close in the preceding day, the FBM KLCI had on April 28 traded lower to 1,850.04 as market participants continued to play on the selling side in anticipation of a lower market.

The research house said that in the absence of stronger supportive buying interest, the benchmark index kept its position near the low end throughout most of the trading sessions before settling off the day’s low at 1,855.06 (- 4.52 , - 0.24%).

“In the broader market, losers outnumbered gainers with 762 stocks ending lower and 183 stocks finishing higher. That gave a market breadth of 0.24 indicating the bears were in control,” it said.

AllianceDBS Research said  the market continued to witness selling pressure on April 28 after the unsuccessful attempt to settle above the 1,863 level on April 27.

The research house said given what had happened in the last 2 days, market participants had clearly chosen not to play an aggressive buying game in the area of 1,863.

“The inability of the benchmark index to close above 1,863 subsequently led to strong profit taking activity.

“This can be seen from the violation of the 1,858 support on April 28 April.

“Following the weak down close, the market is expected to test a lower level again with subsequent support seen at 1,846. The overhead resistance is at 1,863,” it said.

The research house said that indicator wise, the MACD was below the 9-day moving average line.

“The analysis of overall market action on April 28 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,850.04 level on April 29,” said AllianceDBS Research.