The FBMKLCI (-0.1%) ended relatively unchanged as the recovery were capped by profit taking activities in selected banking heavyweights. The lower liners remained downbeat, while the utilities sector (+0.3%) outperformed the mostly negative sectorial peers as the buying sentiment shifted towards defensive stocks.
At 9.15am, the FBMKLCI opened slightly higher by +1.15 points at 1,391.03.
RHB Retail Research, in a note today (June 27), said after a sharp decline on Friday, the FKLI attempted a rebound yesterday but could not sustain it – declining 1.50 pts to close just below the opening level at 1,386 pts. It opened at 1,387 pts and rose to test a high of 1,394 pts, before reversing to reach a low of 1,384.50 pts prior to closing.
The bearish momentum has slowed, indicating the FKLI may consolidate near the 1,380-pt support level. In the event the index resumes its upside movement, it will climb towards the 1,400-pt resistance.
At this stage, the index still trading above the 1,372-pt support, and the counter-trend rebound phase remains intact. So, RHB will keep their bullish bias unchanged.
Traders should retain the long positions initiated at 1,389 pts, ie the close of 16 Jun. To mitigate the trading risks, the initial stop-loss threshold is fixed at 1,372 pts.
The immediate support is marked at 1,380 pts – 13 Jun’s close – followed by 1,372 pts, or the close of 8 Jun.
Conversely, the immediate resistance is pegged at 1,400 pts, followed by 1,415 pts, ie the low of 16 May.
Maybank Investment Bank (Maybank IB) said the FBMKLCI Index opened the week on a softer note in tandem with a mixed performance across regional equities markets – tracking the weaker performance in the overnight US market.
At day’s end, the benchmark index fell 1.01pts, or 0.07%, to 1,389.88pts, led by decliners SIMEPLT, AXIATA, GENT and GENM.
Market breadth was negative with losers outnumbering gainers by 557 to 296. A total of 2.56b shares valued at MYR1.41b changed hands.
The healthcare index continues to extend the ongoing decline along with technology names while domestic sentiment remained mixed amid a lack of catalysts. Technically, Maybank IB expects the FBMKLCI Index to range between 1,375pts and 1,400pts today, with supports remaining at 1,370pts and 1,350pts.
Malacca Securities added the FBMKLCI pared all its intraday gains and slid into the negative territory amidst weaknesses across the regional markets. The local bourse may endure further volatility as Wall Street continues to swing lower while investors monitor the (i) developments in Russia, (ii) the potential interest rate hikes in the upcoming July Fed meeting which may create more economic uncertainties, as well as (iii) the upcoming US 1Q23 GDP. Commodities wise, the Brent crude oil traded above USD73, while the CPO price rallied above RM3,600.
Sector focus: A rally in CPO commodity prices may push the plantation sector higher. Besides, investors may focus on the renewable energy (RE) sector following the government’s plan to position Malaysia as Asean’s centre of electricity interconnection and integration to facilitate the sharing of RE resources.
CGSCIMB said the local benchmark FBMKLCI (KLCI) inched 1.01pts or 0.07% lower to end the day at 1,389.88. The broader market was down with healthcare (-1.67%), technology (-1.19%) and transportation (-0.76%) being the top laggards.
There were only few gainers ended in the green which included utilities (+0.28%), consumer products (+0.25%), property (+0.18%) and plantation (+0.01%). Trading volume fell to 2.56bn (down from 4.90bn on Friday) while trading value also dropped to RM1.41bn (down from RM1.63bn previously).
Market breadth stayed negative for the third consecutive day as 296 gainers lost out to 557 decliners.
The benchmark formed its second black candle yesterday, reaffirming our view that the current rebound from 1,369 may have run its course and a reversal may be underway. If the longer-term downtrend resumes, a retest of the 1,372 levels is likely next after a break below 1,388.
With the market breadth worsening slowly, the odds would continue to favour more weakness ahead. On the upside, the 1,400 psychological level and the falling 50-day EMA (currently at 1,404) act as the immediate resistances. Our portfolio stays in risk-off mode this week.
