KUALA LUMPUR (Jan 20): The FBM KLCI is expected to trade range-bound today with 1,638 points seen as its immediate hurdle.
Sentiment may remain cautious with the flat overnight close at Wall Street and a further drop in crude oil prices, exacerbated by a report that national oil firm Petroliam Nasional Bhd plans to slash spending by RM50 billion over four years.
U.S. stocks pared gains on Tuesday amid a renewed drop in oil prices, giving up most of an early rally that had been spurred by speculation of more stimulus efforts in China, according to Reuters.
Stock markets from Asia to Europe, and initially on Wall Street, rallied to snap a rout this year in equities after Chinese gross domestic product data showed the slowest growth last year in a quarter century, it said.
AllianceDBS Research in its evening edition Tuesday said despite the down close in the preceding day, the FBM KLCI had on Jan 19 traded higher to 1,632.60 as market participants chose to play a buying game.
The research house said under the persistent buying interest, the benchmark index was in the green throughout most of the trading sessions before settling near the day’s high at 1,629.22 (up 6.58 points or 0.41%).
“In the broader market, gainers outnumbered losers with 588 stocks ending higher and 301 stocks finishing lower. That gave a market breadth of 1.95 indicating the bulls were in control,” it said.
AllianceDBS Research said having fallen from the high of 1,706.25 (Dec 30, 2015) to the low of 1,608.81 (Jan 18), the benchmark index registered a higher high on Jan 19.
“This has given a sigh of relief to many market participants.
“More buyers were seen willing to take the chance to play on the buying side although the market sentiment remained weak.
“The main reason behind the buying activity on Jan 19 was believed to be the market rebound from the low of 1,608.81 with a settlement above the 1,620 level on Jan 18,” it said.
The research house said following the up close, we should thus see the market making attempt to gear upward with immediate hurdle seen at 1,638.
It said a crossover of 1,638 could send the benchmark index to the next resistance zone, 1,650 - 1,660, adding that indicator wise, the MACD is still below the 9-day moving average line.
“The analysis of overall market action on Jan 19 revealed that buying power was stronger than selling pressure.
“As such, the FBM KLCI would likely trade above the 1,632.60 level on Jan 20,” said AllianceDBS Research.
Based on corporate announcements and news flows yesterday, companies that may be in focus today could include the following: Guinness Anchor Bhd, Favelle Favco Bhd, Yong Tai Malaysia Bhd, Sapura Resources Bhd, BTM Resources Bhd, Lay Hong Bhd, MQ Technology Bhd, Cybertowers Bhd and Scan Associates Bhd.