KLCI to trade sideways, oil and gas stocks seen in focus

KLCI to trade sideways, oil and gas stocks seen in focus
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KUALA LUMPUR (Nov 26): The FBM KLCI is likely to trend sideways today with immediate hurdle seen at 1,700-points, taking cue from the fall at global markets last Friday.

Oil and gas-related counters are also likely to be in focus today, as plunging crude oil prices could weigh on investors’ sentiment towards these stocks.

Oil prices plunged on Friday on concerns about oversupply, sending world stock markets lower as lagging energy shares weighed down Wall Street, according to Reuters.

Both Brent and U.S. crude fell to their lowest levels since October 2017 and were on course for their biggest one-month decline since late 2014. Although the Organization of the Petroleum Exporting Countries is expected to curb output, rising U.S. oil supply has fueled persistent concerns about a global surplus, it said.

AllianceDBS Research in its evening edition last Friday said she FBM KLCI had on Nov 23 traded within previous day’s range to form an inside day bar. In the absence of stronger buying or selling interest, the benchmark index was moving between the green and red zones throughout the trading sessions before settling near the day’s high at 1,695.88 (up 0.26 points or 0.02%).

“In the broader market, losers outnumbered gainers with 597 stocks ending lower and 236 stocks finishing higher. That gave a market breadth of 0.39 indicating the bears were in better control,” it said.

AllianceDBS Research said the market took a pause on Nov 23 with buyers and sellers seen in a balanced position.

It said a buying attempt with an opening level of 0.85 point higher than previous day’s close of 1,695.62 was initiated in a hope to pull the benchmark index up into the 1,700 zone, but there was no immediate strong follow through buying interest.

“This gave rise a chance to the aggressive market participants to sell. As selling supply exceeded the buying demand, the market came under pressure to trade down to 1,689.14 which was 0.11 point higher than the day’s low of 1,689.03 registered on Nov 22.

“Judging from the way this market carried itself on Nov 23, it appeared that there would be a higher tendency for the market to trade lower.

“However, a return of the market to go above 1,700 would pave the way to go upward with resistance at 1,713.

The research house said following the up close on Nov 23, there should be buying attempt with immediate hurdle at 1,700.

“The analysis of overall market action on Nov 23 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,696.54 level on Nov 26,” said AllianceDBS Research.

Based on corporate announcements and news flow last Friday, stocks in focus today may include the following: Malakoff Corp Bhd, Sime Darby Plantation Bhd, Bumi Armada Bhd, Ta Ann Holdings Bhd, YTL Corp Bhd, Parkson Holdings Bhd, Dayang Enterprise Holdings Bhd, Malaysian Resources Corp Bhd, IOI Properties Group Bhd and Axiata Group Bhd.