Market Preview KLCI expected to come under pressure to go lower

by **Cals** Sat 18 Jun 2016, 03:23

Market Preview

[size=28]KLCI expected to come under pressure to go lower

By Surin Murugiah / theedgemarkets.com | June 17, 2016 : 5:54 AM MYT
KUALA LUMPUR (June 17): The market is expected to come under pressure to go lower today with immediate support at seen 1,611 points for the FBM KLCI.

Sterling advanced on Thursday as campaigning for Britain's vote on whether to leave the European Union was suspended following the murder of a British lawmaker, while U.S. stocks cut losses, according to Reuters.

British Member of Parliament Jo Cox, who was shot dead in the street in her constituency in northern England earlier in the day, had been a vocal supporter of Britain remaining within the EU, it said.

Meanwhile, U.S. stocks, which had tumbled earlier on global growth worries, cut losses and the Dow briefly traded higher.

The Dow Jones industrial average was up 17.67 points, or 0.1 percent, at 17,657.84, the S&P 500 lost 2.41 points, or 0.12 percent, to 2,069.09 and the Nasdaq Composite dropped 10.81 points, or 0.22 percent, to 4,824.12.

AllianceDBS Research in its eveing edition Thursday said that following the up close in the preceding day, the FBM KLCI had on June 16 traded marginally higher to 1,629.47 as some market participants continued to play on the buying side in anticipation of a higher market.

However, it said non-follow through buying support in the area of 1,629.47 prompted renewed selling interest.

It said this pushed the benchmark index down below the 1,622 support again to a low of 1,613.79 before settling at 1,614.90 (down 13.06 points or 0.80%).

“In the broader market, losers outnumbered gainers with 591 stocks ending lower and 195 stocks finishing higher. That gave a market breadth of 0.32 indicating the bears were in control,” it said.

AllianceDBS Research said the higher high followed by a lower low on June 16 indicated that sellers were in better control over the buyers.

“Obviously, there was a change of game play pattern from buying to selling after the opening bell as buyers decided not to fight a battle which carries a higher risk and lower reward ratio.

“After 2 successful endeavours to keep the market above the 1,622 level on June 14 & 15, the market finally gave way to selling pressure.

“This can be seen from the downside violation of 1,622 with a settlement of 1,614.90 on June 16,” it said.

The research house said following the weak down close on June 15, the market is expected to come under pressure to go lower again with immediate support at 1,611.

It said a fall below 1,611 would send the market down to the subsequent support zone, 1,595 – 1,600, adding that indicator wise, the MACD is below the 9-day moving average line.

“The analysis of overall market action on June 16 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,613.79 level on June 17,” said AllianceDBS Research.

Based on corporate announcements and news flow yesterday, companies that might be in focus today include: AE Multi Holdings Bhd, MB World Group Bhd, DKSH Holdings (Malaysia) Bhd, Lion Corp Bhd, AmanahRaya REIT, Brite-Tech Bhd, Sunway Bhd, Reach Energy Bhd, KNM Group Bhd, Press Metal Bhd, Mudajaya Group Bhd and Mah Sing Group Bhd.
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