KLCI week ahead KLCI likely to kick off Dec on firmer footing

by **Cals** Sat 30 Nov 2013, 16:56

KLCI week ahead KLCI likely to kick off Dec on firmer footing

Business & Markets 2013

Written by Surin Murugiah of theedgemalaysia.com

Saturday, 30 November 2013 07:29

KUALA LUMPUR (Nov 30): The FBM KLCI is likely to kick start the final trading month 2013 on firmer footing after gaining 5.87 points month-on-month in November.
The FBM KLCI ended November firmly above the psychologically crucial 1,800-points level, supported primarily by local institutional funds.
Despite some less than impressive corporate earnings announced by some of the bigger names on Bursa Malaysia, analysts are expecting the benchmark FBM KLCI to trend higher next week.
Affin IB vice president and head of retail research Dr Nazri Khan said that he expects local equity prices to continue their steady rally higher on global market strength, positive yen carry trades and a series of well-received liquidity-supportive-economic-figures (Japanese Retail Sales, USA Inflation, USA Consumer Confidence and Europe Inflation) with most indices virtually close to its highest in nearly six years (Nikkei, DAX, FTSE, CAC, Hang Seng, Kospi).
Nazri said both the MSCI All World and FTSE All-World index were poised for their best finish since Christmas 2007 (gaining 18.6% & 17.5% respectively year to date) while USA NASDAQ Composite made an impressive break above 4,000 for the first time in 13 years.
He said Bursa Malaysia should get positive effects from recovering developed market with both centre of subprime crisis, USA and Europe showing resilience in the wake of the unexpected dovishness of Federal Reserve and European Central Bank despite talks of early tapering.
Under the new leadership of Janet Yellen, Federal Reserve is likely to dealy QE tapering measures and there are good reasons to expect the liquidity driven uptrend and upside bias to continue at least over the coming months, said Nazri.
“On the technical front, Bursa momentum studies are trending higher but have not yet entered overbought levels. The market short-term trend is now positive with 20 and 50 day moving average providing strong support for further rebound.
“The next area of resistance is 1,810 and 1,826 levels while support stands at 1,800 and 1,790 levels respectively.
“Although, there may be some short term light volume profit-taking following the recent drive above 1,800 psychochological level, we expect more upside as FBMKLCI finally broke out after being locked inside a tight 1790-1800 range, suggesting the start of a new upleg,” he said.
Nazri said meanwhile, a bullish cup handle pattern unfolding that appears close to completion with this week's FBM KLCI’s push above 1800 a force that could attract greater momentum on a drive to retest the all-time-high of 1826.
He said any breakdown below swing low support of 1,790 however would turn the tide back in favour of the bear camp with the FBM KLCI vulnerable for a deeper corrective retracement, an unlikely scenario given the bullish seasonality and windows dressing in December.
Nazri said overall, he expects the bull camp to maintain control and looks for more rounds of global economic numbers to fuel more gains, adding that the global equity market was likely to focus on active flow of economic data next week, including USA Advanced GDP, USA Weekly Jobless Claims, USA Advanced Durable Goods Orders, Federal Reserve Rate Bernanke Statement, ECB Draghi Statement, Australia Rate Statement, UK Rate Statement, Japan Monetary Policy Meeting Minutes, China Inflation & China Industrial Production data.
“For the weekly strategy, we are inclined towards buying Chinese New Year linked small cap stocks such as Wellcall, Uzma, Deleum, Cypark, DKSH, Iris, Hovid, Yinson and Coastal.
“As for blue chips, traders should accumulate holiday-season-beneficiaries-stocks which do well near the festive year end such as Malaysia Airports, Petronas Dagangan, Maxis, Genting, Dutch Lady, AEON, QL, Zhulian and Tenaga,” he said.
Meanwhile, Alliance IB Research in its evening edition last Friday said the market continued to stay above the 1,800 level on close basis for 2 days in a row.
The research house said while the higher high may not be impressive in the absence of decisive market volume on 29 Nov 2013, the ability of the benchmark index to keep its settlement above the 1,806 level again could mark a beginning of the market to move higher in the coming days.
It said the overhead resistance remains at 1,815, adding that idicator wise, the MACD had crossed above the 9-day MA line.
“The analysis of overall daily market action on 29 Nov 2013 revealed that buying power was stronger than selling pressure.
“As such, FBMKLCI would likely trade above the 1,812.72 level on Dec 2,” it said.