KUALA LUMPUR (Oct 12): The FBM KLCI is expected to test higher level above the 1,710-point level today in line with the gains at most global markets last Friday.
Stocks on major world markets posted their biggest weekly advance since 2011 on Friday, as greater investor appetite for riskier assets propelled gains in equities and a surge in commodities and crude oil prices, according to Reuters.
Declines in the dollar, a bullish oil forecast as well as miner Glencore's pledge Friday to slash world zinc output have lifted beaten-down commodities. Brent and U.S. crude oil gained about 9 percent for the week, the biggest weekly percentage increase in six weeks, it said.
AllianceDBS Research in its evening edition last Friday said that supported by the up close above the 1691 level in the preceding day, the FBM KLCI had on Oct 9 gapped up to trade into the 1,700 zone.
The research house said the benchmark index subsequently reached the highest high of 1,717.48 since August 7 as market participants continued to play on the buying side in anticipation of a higher market.
It said that under the strong buying interest, the benchmark index was in the green throughout the trading sessions before settling off the day’s high at 1,706.54 (up 14.34 points or 0.85 %) ahead of weekend.
“In the broader market, gainers outnumbered losers with 567 stocks ending higher and 305 stocks finishing lower. That gave a market breadth of 1.85 indicating the bulls were in control,” it said.
AllianceDBS Research said the market witnessed strong buying activity again on Oct 9 with retail traders and investors rushing in to chase up the market.
It said this could be seen from the upside gap created on the opening bell.
“There was a shift of market sentiment to the “bullish” side with many market participants even willing to pay the market at the opening level of 1,702.78 when the previous market settlement was only at 1,692.20.
“The only explanation behind the buying support was believed to be the fear of missing out the money making opportunity.
‘Following the up close on Oct 9, the benchmark index is likely to test higher level again with hurdle still remains at 1,710,” it said.
The research house said a crossover of 1,710 on close basis could see the benchmark index gearing toward 1,740 – 1,750, adding that indicator wise, the MACD was above the 9-day moving average line.
“The analysis of overall market action on Oct 9 revealed that buying power was stronger than selling pressure.
“As such, the FBM KLCI would likely trade above the 1,717.48 level on Oct 12,” said AllianceDBS Research.