Market Preview KLCI to trend sideways, support at 1,633 points

by **Cals** Thu 12 May 2016, 23:05

Market Preview

[size=28]KLCI to trend sideways, support at 1,633 points

By Surin Murugiah / theedgemarkets.com | May 12, 2016 : 6:03 AM MYT

KUALA LUMPUR (May 12): The FBM KLCI is expected to trend sideways today, with support at 1,633 points, in line with the overnight retreat at most global markets.

U.S. and European stocks retreated on Wednesday amid disappointing corporate earnings, while oil prices surged for a second day as data showed U.S. crude inventories fell unexpectedly last week, according to Reuters.

The U.S. dollar fell 0.5 percent against a basket of currencies after rallying for six consecutive days, as investors looked to book profits. The yen rebounded 0.7 percent against the dollar, halting declines against the greenback as Japan has threatened to intervene on its currency, it said.

AllianceDBS Research in its evening edition Wednesday said the FBM KLCI had on May 11 traded higher to 1,646.96 as market participants continued to play on the buying side in anticipation of a higher market.

It said under the persistent buying support, the benchmark index managed to keep its position in the green throughout most of the time before settling near the day’s high at 1,644.58 (up 8.74 points 0.53%).

“In the broader market, gainers outnumbered losers with 467 stocks ending higher and 359 stocks finishing lower. That gave a market breadth of 1.30 indicating the bulls were in control,” it said.

AllianceDBS Research said the recent sell-off may have dampened the market sentiment, but market participants apparently had chosen to play a buying game given the improving risk reward profile in the last 2 days.

“The follow through buying pressure on May 11 suggested that market participants were willing to play a on the long side after the positive settlement above the 1,633 level on May 10.

“While the market development in the last 2 days was encouraging, this market is still seen in need of stronger buying confidence to drive the market upward.

“In general, buyers can’t plan out the trading opportunities for what is likely to happen next without positive catalyst,” it said.

The research house said following the settlement at 1,644.58 on May 11, investors should see the market gearing towards 1,660.

It said the support is pegged at 1,633, adding that indicator wise, the MACD is below the 9-day moving average line.

“The analysis of overall market action on May 11 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,646.96 level on May 12,” said AllianceDBS Research.

Based on corporate announcements and news flow yesterday, the companies that may be in focus today could include the following: TSR Capital Bhd, Petronas Dagangan Bhd, Gas Malaysia Bhd, Paramount Corp Bhd, LBS Bina Group Bhd, ML Global Bhd, Iris Corp Bhd, CAB Cakaran Corp Bhd, Kumpulan Jetson Bhd and PRG Holdings Bhd.
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