Market Preview KLCI may arrest decline, climb toward 1,700 level on bargain hunting

by **Cals** Thu 28 Apr 2016, 03:10

Market Preview

[size=28]KLCI may arrest decline, climb toward 1,700 level on bargain hunting

By Surin Murugiah / theedgemarkets.com | April 27, 2016 : 5:41 AM MYT

KUALA LUMPUR (April 27): The FBM KLCI may arrest its decline and climb toward the 1,700-point level today on some bargain hunting activies following the marginal overnight gains at Wall Street.

The dollar fell on Tuesday after weaker-than-expected U.S. economic data boosted expectations the Federal Reserve would hold interest rates lower for longer, while U.S. Treasury yields touched five-week highs as traders made room for government debt supply ahead of the central bank's policy statement, according to Reuters.

U.S. durable goods orders rebounded less than anticipated in March and a survey of American consumer confidence missed expectations, adding to a slew of weak data on the U.S. economy in the first quarter, it said.

AllianceDBS Research in its evening edition Tuesday said the FBM KLCI had on April 26 come under big selling pressure after the opening bell as market participants chose not to play on the buying side in anticipation of a lower market.

It said under the persistent selling pressure, the benchmark index broke the 1,704 support to settle at the day’s low of 1,692.50 (down 22.01 points or 1.28%).

“In the broader market, losers outnumbered gainers with 779 stocks ending lower and 164 stocks finishing higher. That gave a market breadth of 0.21 indicating the bears were in control,” it said.

AllianceDBS Research said the downside breakout of 1,704 on April 26 was a big surprise, because the selling pressure was so overwhelming that all the buying orders placed at 1,704 were filled.

“In the face of dwindling buying demand, sellers with unfilled orders became uneasy.

“They then chased the market down to book the next available buyers.

“This subsequently pushed the benchmark index down to a low of 1,692.50,” it said.

The research house said following the sell-off, the market is now perceived to be technically weak.

It said sellers were thus expected to sell further into the market with market support seen at 1,685.

It explained that a fall below 1,685 could send the market down to the subsequent support at 1,676, adding that indicator wise, the MACD is below the 9-day moving average line.

“The analysis of overall market action on April 26 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,692.50 level on April 27,” said AllianceDBS Research.

Based on corporate news flow and announcements yesterday, stocks in focus today could include: Unisem (M) Bhd, Reach Energy Bhd, Globetronics Technology Bhd, Petronas Gas Bhd, Nestle (Malaysia) Bhd, Vivocom International Holdings Bhd, British American Tobacco (Malaysia) Bhd, YFG Bhd, Excel Force MSC Bhd, Maxwell International Holdings Bhd, Sasbadi Holdings Bhd, Pasukhas Group Bhd and Seacera Group Bhd.
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