Market Preview KLCI to trend sideways, support remains at 1,700

by **Cals** Fri 01 Apr 2016, 08:05

Market Preview

[size=28]KLCI to trend sideways, support remains at 1,700

By Surin Murugiah / theedgemarkets.com | March 31, 2016 : 6:44 AM MYT

KUALA LUMPUR (March 31): The FBM KLCI is expected to trend sideways today, with support seen at 1,700 points, despite the higher overnight close at most global markets as buying sentiment at the local market took a dent yesterday.

An index of global stocks on Wednesday climbed to near its highest point of the year while the dollar weakened as easing concerns about potential interest rate increases led investors into riskier assets, according to Reuters.

Oil prices edged higher, paring stronger initial gains as U.S. crude inventories built up, it said.

AllianceDBS Research in its evening edition Wednesday said led by the strong up close in the preceding day, the FBM KLCI had on March 30 gapped up to reach a high of 1,724.13 as market participants continued to play on the buying side in anticipation of a higher market.

It said under the persistent supportive buying interest, the benchmark index was in the green throughout the trading sessions before settling near the day’s low at 1,717.82 (up 2.78 points or 0.16%).

“In the broader market, gainers outnumbered losers with 433 stocks ending higher and 351 stocks finishing lower. That gave a market breadth of 1.23 indicating the bulls were in control,” it said.

AllianceDBS Research said the upside gap indicated the urgency to establish stock positions.

“However, buyers became cautious in the area of 1,724 as the benchmark index was only 3 points away from the recent high of 1,727 (March 23).

“This had subsequently led to profit taking activity which pushed the market down to 1,716.39.

“Given the way this market carried itself on March 30, buyers and sellers are expected to exchange their stock positions between 1,712 and 1,727 in the coming few days until we see a breakout,” it said.

The research house said a crossover of 1,727 would see the market gearing towards the next hurdle at 1,745.

It said that conversely, a fall below 1,712 would send the benchmark index down to the subsequent support at 1,700, adding that indicator wise, the MACD was below the 9-day moving average line.

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

“As such, the FBM KLCI would likely trade below the 1,716.39 level on March 31,” said AllianceDBS Research.

Based on corporate announcements and news flow yesterday, companies that may be in focus today could include the following: Sapura Industrial Bhd, Crescendo Corporation Bhd, Malaysia Marine and Heavy Engineering Bhd, Yinson Holdings Bhd, Sona Petroleum Bhd, Lay Hong Bhd, YKGI Holdings Bhd and Perdana Petroleum Bhd.

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