KUALA LUMPUR (Dec 1): The FBM KLCI is expected to start December on a muted note in line with the mixed overnight close at most global markets.

With few fresh domestic catalysts and a likely heated up Umno general assembly next week, the local market is expeted to remain cautious.

The dollar pared gains after hitting an 8-1/2-month high against major currencies on Monday, while the prospect of further European Central Bank stimulus dragged the euro, and oil futures fell on worries about a growing supply glut, according to Reuters.

Global stock markets were mixed, with Wall Street ending the session lower ahead of a crucial payroll report Friday, while European shares finished higher. The three major U.S. indexes ended November higher for a second straight month, it said.

AllianceDBS Research in its evening edition Monday said the FBM KLCI had on Nov 30 opened the day on a weak note as market participants chose to play on the selling side.

It said under the persistent selling pressure, the benchmark index broke the 1,670 support to reach an intraday low of 1,663.03 before rebounding to settle at 1,672.16 (down 10.43 points or 0.62%).

“In the broader market, losers outnumbered gainers with 679 stocks ending lower and 270 stocks finishing higher. That gave a market breadth of 0.39 indicating the bears were in control,” it said.

AllianceDBS Research said that having stayed between 1,670 and 1,688 for 4 days, the FBM KLCI came under selling pressure on Nov 30.

“The benchmark index subsequently broke the 1,670 support to reach an intraday low of 1,663.03 as market participants decided to liquidate a portion of their stock positions for fear of unexpected negative market events.

“The lower low may have indicated that sellers were in better control over the buyers.

“However, the ability of the benchmark index to climb back up above the 1,670 level with a close at 1,672.16 showed that the low of 1,663.03 happened to be a level where there was more willing buying demand than selling supply,” it said.

The research house said given the sell down on the last market day of Nov 2015, the benchmark index would have to consolidate its position in a wider range between 1,660 and 1,688 instead of earlier expected smaller range between 1,670 and 1,688.

It said a fall below 1,660 would put pressure on the index down to the subsequent support at 1,665, adding that indicator wise, the MACD was still above the 9-day moving average line.

“The analysis of overall market action on Nov 30 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,663.03 level on Dec 1,” said AllianceDBS Research.