KLCI to sustain gains on resurgent buying interest

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KUALA LUMPUR (March 26): The FBM KLCI is expected to sustain its gains today on resurgent buying interest as well as window dressing activities in the run-up to the end of the first quarter of 2015, despite the weaker overnight close at Wall Street.

Wall Street stocks sold off sharply, with semiconductor and biotech shares sliding more than 4 percent, and the dollar slipped on Wednesday after government data signaled the U.S. economic expansion was slowing, according to Reuters.

Treasuries also dropped in price after a disappointing sale of new government debt, while gains in the euro prompted a pullback in European stock markets, it said.

The Nasdaq was the biggest loser on Wall Street, falling more 2 percent, after a modest rise in equities on news of a deal between Kraft Foods and Heinz Co to create North America's third-largest food company gave way to a wave of selling, said Reuters.

AllianceDBS Researh in its evening edition Wednesday said that led by the up close in the preceding day, the FBM KLCI had on March 25 crossed over the 1,815 hurdle to reach a high of 1,823.19 as market participants continued to play on the buying side in anticipation of a higher market.

It said that in the absence of selling interest, the benchmark index traded firmly throughout the trading sessions before settling at 1,819.10 (+5.06, +0.28%).

“In the broader market, gainers outnumbered losers with 449 stocks ending higher and 391 stocks finishing lower. That gave a market breadth of 1.14 indicating the bulls were in control,” it said.

AllianceDBS Research said that having reversed to settle above the 1,800 level on March 24, the benchmark index continued to advance further in the subsequent day (25 Mar 2015). However, buyers became cautious as the benchmark index drew nearer to the 1,826 resistance.

It said following the up close on March 25, the market was poised for a test of 1,826.

It said a crossover of 1,826 should see the benchmark index gearing towards the next resistance at 1,830, adding that the support was at 1,812.

The research house said a fall back below 1,812 would put pressure on the market down to the subsequent support zone, 1790 - 1,800.  

“The analysis of overall market action on March 25 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,823.19 level on March 26,” said AllianceDBS Research.