The Malaysia stock market has ticked higher in back-to-back sessions, advancing more than 7 points or 0.5 percent along the way. The Kuala Lumpur Composite Index now rests just beneath the 1,425-point plateau and it may see additional support on Thursday.
At 9.14am, the FBM KLCI opened at 1424.34.
RHB Retail Research said today (May 18) that on Wednesday, the FKLI inched 0.5 pts lower to close at 1,422 pts as it struggled to stay above the 50-day SMA line. The commodity started off Wednesday’s session at 1,422.50 pts.
After trading in between 1,425 pts and 1,418 pts, it closed at 1,422 pts.
The long shadows show the bulls and bears share equal strength.
The neutral candlestick also signifies that the momentum is slowing down for consolidation.
At this juncture, the 50-day SMA line is still trending lower. If the index retreats below the moving average line, expect selling pressure to be heightened again.
Meanwhile, a strong resistance has formed at the 1,437-pt level. For now, the technical indicators show that the bearish setup remains intact. Hence, RHB holds on to their negative trading bias.
Maybank IB said despite paring its earlier gain, the FBMKLCI Index still managed to close higher on stronger interest in plantation stocks. The benchmark index added 0.84pts, or 0.06%, to close the session at 1,423.34, led by gains in SIMEPLT, PETDAG, IOICORP and DIALOG.
Market breadth however was mixed with losers barely outnumbering gainers by 427 to 412. A total of 2.59b shares valued at MYR1.63b changed hands. Both plantation and healthcare names extended recent gains while mid-cap stocks outperformed both big and small caps names.
Technically, Maybank IB expects the FBMKLCI Index to range between 1,410pts and 1,440pts today, with supports remaining at 1,380pts and 1,350pts.
Malacca Securities Sdn Bhd said the FBM KLCI gained marginally higher for the session, led by Petronas Dagangan and Nestle. Although the deal for the US debt ceiling is not reached, the market could be speculating a positive outcome before this weekend to be seen on the ongoing debt ceiling negotiations, hence this has contributed to the strong performance on Wall Street and the market has seen reducing exposure on gold.
However, on our local front, the state election, coupled with the ongoing earnings season could cap the upside potential at least for the near term. Commodities wise, the Brent crude oil price surged above USD75, while the CPO is below RM3,500 and the gold price fell below USD2,000.
Sector focus: With the positive performance from Wall Street, we believe traders may look into riskier sectors in the near term. We expect the healthcare related stocks to take the lead on the back of recovering earnings, while investors may look into poultry stocks for investing opportunities after Teoseng’s stellar results.
Meanwhile, CGS-CIMB said Asian stock markets finished mixed on Wednesday on concerns over China’s economic growth.
The local benchmark FBMKLCI (KLCI) recovered 0.84pts or 0.06% to end the day at 1,424.34. Healthcare (+1.90%) led the top gainer for the day, followed by plantation (+1.65%) and utilities (+1.20%).
On the flip note, telecommunications (-0.67%), REIT (-0.45%) and industrial products (-0.19%) were the top laggards. Trading volume rose to 2.60bn (up from 2.57bn on Tuesday) while trading value improved to RM1.63bn (up from RM1.51bn previously).
Market breadth turned slight negative as 412 gainers marginally lost out to 427 decliners. The benchmark formed its second white candle yesterday and pulled away from the double support near the lower end of the 1,416-1,438 range.
Prices retested the 20-day EMA but failed to close above it. Both the 20-day and 50-day EMAs currently act as the immediate resistances. A close above both the said EMAs would indicate that the KLCI is likely to push higher to fill the 10th March gap of 1,445-1,448 next.
However, the bears still have the slight upper hand as the benchmark remains below the EMAs. A breakdown below the 1,412 level is required to confirm that the bears are in charge.
The next support is seen at the 1,400 psychological levels. Our portfolio stays in risk-off mode this week.
