KLCI seen recovering on bargain hunting, gains to be capped

KLCI seen recovering on bargain hunting, gains to be capped
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KUALA LUMPUR (Nov 22): The FBM KLCI is seen recovering today on some mild bargain hunting but gains may be capped as sentiment at the local market is expected to remain nervy.

World stock markets climbed on Wednesday, with earnings and gains in tech stocks lifting shares on Wall Street, and oil rebounded from a steep sell-off as U.S. government data pointed to strong demand, according to Reuters.

The recovery in U.S. tech and other momentum stocks boosted the benchmark S&P 500 stock index after it fell 3.5 percent over the previous two sessions. Shares of Amazon.com Inc , Alphabet Inc and Facebook Inc rose more than 2 percent, while shares of Apple Inc edged up 0.6 percent, it said.

The Dow Jones Industrial Average rose 173.33 points, or 0.71 percent, to 24,638.97, the S&P 500 gained 23.82 points, or 0.90 percent, to 2,665.71 and the Nasdaq Composite added 107.27 points, or 1.55 percent, to 7,016.09, said Reuters.

AllianceDBS Research in its evening edition Wednesday said the FBM KLCI had on Nov 21 traded lower to 1,689.68 as market participants chose to play on the selling side in anticipation of a lower market.

It said under the persistent selling interest, the benchmark index was in the red throughout the trading sessions before settling at 1,695.37 (down 15.34 points or 0.90%).

“In the broader market, losers outnumbered gainers with 497 stocks ending lower and 319 stocks finishing higher. That gave a market breadth of 0.64 indicating the bears were in better control,” it said.

AllianceDBS Research said the market saw selling pressure on Nov 21 with the benchmark index breaking below the 1,700 level to reach a low of 1,689.68.

It said at the day’s low of 1,689.68, the upside gap left behind on Nov 15 was filled.

“A selling attempt with an opening level of 16.14 points lower than previous day’s close of 1,710.71 was initiated in a hope to trigger a heavy sell down by instilling fear of panic selling given the psychological significance of the 1,700 level.

“In fact, the downside violation of the 1,700 level was seen negative for market development when the market had been keeping its position above this 1,700 psychological level with an intention to turn the market around to the upside,” it said.  

AllianceDBS Research said following the down close on Nov 21, we should see selling attempt with immediate hurdle at 1,700.

“The analysis of overall market action on Nov 21 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,689.68 level on Nov 22,” said AllianceDBS Research.

Based on corporate announcements and news flow yesterday, stocks in focus today may include the following: Sime Darby Bhd, Malaysia Airports Holdings Bhd, Sapura Energy Bhd, MSM Malaysia Holdings Bhd, Paramount Corp Bhd, Media Prima Bhd, Pos Malaysia Bhd, AirAsia X Bhd, Sunway Bhd and Sumatec Resources Bhd.