KLCI to trend higher, gains likely to be capped by profit taking

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KUALA LUMPUR (April 7): The FBM KLCI is expected to trend higher today albeit with gains likely capped by some mild profit taking.

U.S. stocks rose on Monday after a weaker-than-expected jobs report drove expectations that the Federal Reserve will postpone its first interest rate increase in nearly a decade, according to Reuters.

Trading was volatile and volumes were low as major European markets were closed for the Easter holiday. Major indexes opened lower before rebounding to rise as much as 1 percent. In currency markets, the U.S. dollar index moved between a decline of 0.2 percent and a rise of 0.7 percent, and Wall Street equities came off their highs as the dollar strengthened in the afternoon, it said.

AllianceDBS Research in its evening edition on Monday said that backed by last Friday’s close of 1,834.52, the FBM KLCI had on April 6 traded higher to a high of 1,844.83 as market participants continued to play on the buying side in anticipation of a higher market.

It said that under the persistent supportive buying interest, the benchmark index was in the green throughout the trading sessions before settling at 1,842.94 (+8.42, +0.46%).

“In the broader market, gainers outnumbered losers with 393 stocks ending higher and 379 stocks finishing lower. That gave a market breadth of 1.03 indicating the bulls were in control with the bears closely matched,” it said.

AllianceDBS Research said that having overcome the 1,830 hurdle on April 3, the benchmark index continued to ride on the positive momentum to advance into the 1,840 zone on April 6.

However, it said the market met resistance selling pressure in the area of 1,845.

“The inability of the benchmark index to inch higher than 1,844.83 resulted in some profit taking activity.

“This can be seen from the off day’s high settlement at 1,842.94.

“Given the up close, a crossover of 1,845 should see the market gearing towards the next hurdle at 1,860. The market support is pegged at 1,830,” it said.

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

“The analysis of overall market action on April 6 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,844.83 level on April 7,” said AllianceDBS Research.