Market Preview Bargain hunting to lift KLCI but gains may be capped

by **Cals** Thu 30 Jun 2016, 00:32

Market Preview

[size=28]Bargain hunting to lift KLCI but gains may be capped

By Surin Murugiah / theedgemarkets.com | June 29, 2016 : 6:03 AM MYT

KUALA LUMPUR (June 29): Bargain hunting is expected to lift the FBM KLCI today in line with the overnight bounce at most global markets, as battered stocks are seen to be back in vogue and investors have come to terms with the changes Brexit would bring about.

Gains at the local market, however, may be capped as major European Union bloc members haste Britain to speed up its exit process.

European and U.S. shares rebounded on Tuesday and the battered pound rose as markets digested Britain's vote last week to leave the European Union, according to Reuters.

Bargain-hunting lifted stocks worldwide for the first time in three days, but there was still widespread uncertainty as the bloc's leaders, including soon-to-be-ex UK Prime Minister David Cameron, held their first post-vote meeting in Brussels, it said.

AllianceDBS Research in its evening edition Tuesday said the FBM KLCI had on June 28 traded higher to 1,635.86 as market participants took the chance to play on the buying side.

It said under the stronger buying support, the benchmark index turned green in the afternoon trading session before settling near the day’s high at 1,634.04 (up 4.52 points or 0.28%).

“In the broader market, gainers outnumbered losers with 528 stocks ending higher and 268 stocks finishing lower. That gave a market breadth of 1.97 indicating the bulls were in control,” it said.

AllianceDBS Research said the higher high on June 28 was encouraging as it suggested that traders and investors were beginning to recover from the negative effect of external political event (i.e. Brexit) after spending 3 days to digest the reasons behind the sudden sell down on June 24.

“A close observation of how this market carried itself from June 24 June to June 28 revealed that the presence of supportive buying interest.

“This can be seen from the near day’s high settlement in those periods.

“However, it remained pre-mature to confirm a shift in market direction at this juncture,” it said.

The research said that therefore, the market is likely to trade between 1,611 and 1,635 in the next few days.

It said a decisive crossover of 1,635 would see the benchmark index gearing towards 1,642, adding that indicator wise, the MACD is above the 9-day moving average line.

“The analysis of overall market action on June 28 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,635.86 level on June 29,” said AllianceDBS Research.

Based on corporate announcements and news flow yesterday, companies that may be in focus today could include the following: Tropicana Corporation Bhd, SapuraKencana Petroleum Bhd, JAKS Resources Bhd, OCK Group Bhd, UEM Edgenta Bhd, Subur Tiasa Holdings Bhd, Comintel Corporation Bhd, YTL Power International Bhd and Wah Seong Corporation Bhd.
[/size]