KLCI seen lower on weaker buying interest, profit taking

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KUALA LUMPUR (March 11): The FBM KLCI is likely to remain cautious in line with most global markets as weaker buying interest and profit taking have taken a toll on the local bourse.

The U.S. dollar rallied across the board on Tuesday as the prospect of the first rise in U.S. interest rates in almost a decade stoked global volatility, hitting stocks and oil prices, according to Reuters.

A resetting of the likely timing of the first Federal Reserve Funds Rate hike since June 2006 was the main driver for Tuesday's selling in equities, analysts said, it said.

AllianceDBS Research in its evening edition Tuesday said the FBM KLCI had on March 10 traded marginally higher to 1,799.05 as some market participants chose to play on the buying side in anticipation of a higher market.

However, it said weak follow through buying interest in the area of 1,799.05 prompted profit taking activity, adding this put pressure on the market down to settle at the day’s low of 1,789.73 (- 2.01, - 0.11%).

“In the broader market, gainers outnumbered losers with 457 stocks ending higher and 350 stocks finishing lower. That gave a market breadth of 1.30 indicating the bulls were in control,” said the research house.

AllianceDBS Research said the market recovery seen in the preceding day was indeed encouraging, but market participants were cautious in their buying game play on March 10.

The research house said this could be seen from the marginal higher high after the opening bell.

It said the downside gap left behind on March 9 remained unfilled.

“Given the weak down close on March 10, the benchmark index is expected to come under selling pressure again with immediate support at 1,780.

“A fall below 1,780 is likely to send the market down to the next support at 1,730. The overhead resistance is at 1,800,” it said.

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

“The analysis of overall market action on March 10 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,789.73 level on March 11,” said AllianceDBS Research.