KLCI may stage mild rebound but gains seen limited

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KUALA LUMPUR (April 23): The FBM KLCI may stage a mild rebound today in line with global markets that drifted higher overnight but gains are seen limited given the lack of fresh local catalysts and cautious investor sentiment at Bursa Malaysia.

Stocks in major markets drifted higher on Wednesday as investors took an optimistic view of the latest batch of U.S. corporate earnings, while U.S. Treasury prices declined after home sales data added to anticipation of a rate hike by the U.S. Federal Reserve later this year, according to Reuters.

Wall Street struggled to find its footing in morning trading as quarterly earnings continued their early trend of companies topping earnings estimates but falling short of revenue expectations. Equities slowly climbed in later trading to leave the benchmark S&P 500 index 0.55 percent below its intraday record set on Feb. 25, it said.

AllianceDBS Research in its evening edition Wednesday said that the FBM KLCI had on April 22 traded marginally higher to 1,863.61 on the opening bell 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 1,863 prompted profit taking activity.

The research house said this put pressure on the benchmark index down to a low of 1,853.72 before settling near the day’s low at 1,854.77 (- 8.03 , - 0.43%).

“In the broader market, losers outnumbered gainers with 564 stocks ending lower and 293 stocks finishing higher. That gave a market breadth of 0.51 indicating the bears were in control,” it said.

AllianceDBS Research said the crossover of 1,858 in the previous day failed to pull in strong buying interest on April 22.

The research house said this showed that market participants had chosen to be conservative in their game play instead of dancing to the tune of excitement created by the 1,858 upside breakout on April 21.

It said following the down close at 1,854.77 on April 22, the benchmark index is seen under pressure to test a lower level with an immediate support at 1,845.

It said the overhead resistance was at 1,858 as we need to see a minimum of 3 consecutive settlements above the 1,858 level for a valid upside breakout.

The research house said that indicator wise, the MACD was above the 9-day moving average line.

“The analysis of overall market action on April 22 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,853.72 level on April 23,” said AllianceDBS Research.