The Malaysia stock market has moved lower in four straight sessions, sinking almost 15 points or 1 percent along the way. The Kuala Lumpur Composite Index now sits just above the 1,450-point plateau although it’s doe for support on Wednesday.
At 9.15am, the FBMKLCI opened +1.89 points higher at 1,452.67.
RHB Retail Research Market Dateline said today (Dec 27) that the FKLI continued its pullback towards the 50-day SMA line yesterday, declining 5 pts to close at 1,452.50 pts – still maintaining its uptrend rebound above the SMA line.
The session began at 1,458 pts, then declined towards the end – reaching a low of 1,450.50 pts before the close. Despite the bearish momentum yesterday, the index sustained itself above the rising 50-day SMA line, affirming its recent upward rebound.
With the RSI flat at the 48% level, RHB anticipates the FKLI may consolidate near the 50-day SMA line before potentially rebounding higher towards the 1,474 pts immediate resistance in the later sessions. Nevertheless, a fall beneath the SMA line would pose risks for further downside towards the 1,440 pts immediate support.
Based on the overall trend, RHB maintains their bullish trading stance.
Traders should stick to the long positions initiated at 1,455 pts, ie the close of 3 Nov. To mitigate the trading risks, the stop-loss threshold is set at 1,440 pts.
The first support is pegged at the aforementioned 1,440 pts, followed by 1,430 pts. Towards the upside, the immediate resistance is kept at 1,474 pts, or 7 Nov’s high, followed by 1,485 pts.
Malacca Securities (MSSB) said the FBMKLCI (-0.25%) closed lower due to further profit taking activities within the banking heavyweights and in the absence of fresh leads.
On the broader market, the Healthcare sector (+0.99%) gained on the back of the glove counters rally, while the Plantation sector (-0.54%) fell.
The FBMKLCI extended the consolidation phase with further profit taking activities emerging within the index heavyweights. However, the US stock markets continued to charge higher led by the technology sector in anticipation of at least 3 rate cuts by the Federal Reserves in 2024. This is in line with MSSB’s view that given the US GDP is still growing in 3Q23 and the inflation data namely the CPI, PPI and PCE came in within expectations last month, MSSB believes the Fed will be staying less hawkish for the near term.
Meanwhile, closer to home, MSSB remains optimistic in the final trading week of the year that window dressing activities may emerge and push the FBMKLCI higher.
On the commodity markets, Brent oil prices traded higher above the USD80/bbl mark.
Sector focus: MSSB is still expecting buying support to return within the Technology sector in view of the strong rally in the US. Also, we like the Johor-theme coupled with the potential revival of the mega infrastructure projects next year, which may provide an upside move towards the Construction, Properties, Building Materials as well as the Utilities sectors. We favour the Consumer sector in view of normalising costs and the ongoing recovery theme post Covid-19 environment.
Bloomberg FBMKLCI Technical Outlook
The FBMKLCI ended marginally lower, consolidating for the fourth session. The technical readings on the key index were however negative, with the MACD Histogram turned negative, while the RSI dips below the 50 level. The resistance is envisaged around 1,470-1,480 and the support is set at 1,440-1,450.
