KLCI to trade range bound given cautious local sentiment

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KUALA LUMPUR (April 13): The FBM KLCI is expected to trade range-bound today despite the global rally given the cautious local sentiment.

World equity markets tested record highs on Friday on hopes of more stimulus from top central banks, while the dollar strengthened on favorable government debt yields compared to those of most other developed countries, according to Reuters.

Wall Street scored solid gains after U.S. conglomerate General Electric Co. said it plans to sell assets and buy back up to $50 billion of its stock. This propelled GE shares to their highest since September 2008, ending up 10.8 percent at $28.51 in heavy volume, it said.

AllianceDBS Research in its evening last Friday said that the FBM KLCI had on April 10 traded lower to 1,840.77 as market participants continued to play on the selling side in anticipation of a lower market.

It said that in the absence of supportive buying interest, the benchmark index was in the red throughout most of the trading sessions before settling off the day’s low at 1,844.31 (-5.08 , -0.27%) ahead of weekend.

“In the broader market, gainers outnumbered losers with 422 stocks ending higher and 403 stocks finishing lower. That gave a market breadth of 1.04 indicating the bulls were in control with the bears closely matched,” it said.

AllianceDBS Research said the market saw another round of profit taking activity on April 10.

The research house said given the lower low on April 10, market participants seemed to have a stronger inclination to play a selling game at this juncture.

“The benchmark index is thus likely to test lower level again with immediate support at 1,840.

“A fall below 1,840 again would put pressure on the benchmark index down to the subsequent support at 1,835. The immediate hurdle is seen at 1,850,” it said.

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

“The analysis of overall market action on April 10 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,840.77 level on April 13,” said AllianceDBS Research.