KLCI to trend modestly higher, gains seen limited

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KUALA LUMPUR (April 17): The FBM KLCI is expected to trend modestly higher today on impoved buying sentiment at the local bourse, but gains are seen limited on the back of the weaker overnight close at Wall Street.

Wall Street equities finished modestly lower on Thursday as investors worried about coming corporate results, while European stocks fell nearly 1 percent under the weight of Greece's worsening financial predicament, according to Reuters.

Euro zone government borrowing costs hit new lows, the dollar dropped, and oil prices climbed to fresh 2015 highs on fighting in Yemen, it said.

AllianceDBS Research in its evening Thursday said that led by the up close in the preceding day, the FBM KLCI had on April 16 traded higher to 1,849.22 as market participants continued to play on the buying side in anticipation of a higher market.

However, it said non-follow through buying interest in the area of 1,849 prompted profit taking activity.

The research house said this pulled the benchmark index down to a day’s low of 1,838.27 before rebounding to settle at 1,847.94 (+7.81, +0.42%) due to late buying of selective blue chip stocks.

“In the broader market, gainers outnumbered losers with 517 stocks ending higher and 340 stocks finishing lower. That gave a market breadth of 1.52 indicating the bulls were in control,” it said.

AllianceDBS Research said the benchmark index made a higher high on April 16 after registering lower lows for 6 consecutive days.

It said the action of late buying of selective blue chip stocks indicated the intention of some market participants to move the benchmark index away from the immediate risk of breaking below the 1,837 support.

“Following the up close on 16 Apr 2015, the benchmark index is seen ready to test the 1,850 hurdle,” it said.

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

“The analysis of overall market action on April 16 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,849.22 level on April 17,” said AllianceDBS Research.