Bursa Malaysia on Friday ended the two-day losing streak in which it had eased just over 3 points or 0.2 percent.
The Kuala Lumpur Composite Index now sits just beneath the 1,535-point plateau although it may be stuck in neutral on Monday.
At 9.16am, the FBMKLCI dipped -0.17 points to open at 1,533.35.
The FKLI is resuming the northbound journey after it charted a bullish candlestick last Friday, climbing 7 pts and closing at 1,535 pts.
RHB Retail Research in a note today (Feb 19) said the index started off the session at 1,528.50 pts and after setting its foothold at the day’s low of 1,527 pts, it rose to the day’s high of 1,538.50 pts before the close.
The latest session sees the index charting a “higher low”, suggesting that the bulls currently have the technical advantage.
With the RSI rounding upwards now, we are of the view that the bullish momentum is in play now.
In the event the positive price action follows through, the index will climb towards the 1,550-pt level.
Since the bulls are still in control, we hold on to our positive trading bias.
Traders should retain the long positions initiated at 1,455 pts, or the close of 3 Nov 2023.
To manage the downside risks, the stop-loss is fixed at 1,450 pts.
The first support is set at 1,515 pts, followed by 1,500 pts.
Conversely, the first resistance is eyed at 1,550 pts, followed by 1,570 pts.
Malacca Securities (MSSB) the FBM KLCI (+0.34%) ended higher, in line with the positive performance in the regional stock markets, boosted by selected Telco, Consumer Products and Transportation heavyweights.
On the broader market, the Transportation & Logistics sector (+0.87%) was the leading sector, while the Utilities sector (-0.88%) declined.
The Day Ahead
The FBMKLCI continued to charge higher for the week and closed firmly above 1,530 led by buying support within selected Banking and Transportation & Logistics heavyweights.
However, the US stock markets took a beating after the PPI data came in hotter-than-expected, which pushed back hopes for an imminent interest rate cut by the Fed.
Nevertheless, we expect buying interest to prevail within the local front, supported by the upcoming earnings season.
On the commodity market, the Brent oil price closed higher for the session with the ongoing concerns over geopolitical tension.
Sectors focus: As they are heading into a busy corporate earnings season, they expect traders to look for opportunities within the fundamentally growing companies, they like the Consumer and O&G sectors.
Meanwhile, trading themes such as the potential revival of KL-SG HSR and several construction projects may bode well for the Construction, Property, Utilities as well as Renewable Energy sectors.
Besides, the calling for proposals to design, implement and maintain the NIISe last year may expect trading interest within the Technology sector as more than 10 companies have submitted their proposals.
Bloomberg FBMKLCI Technical Outlook
The FBMKLCI ended higher after a two-bar consolidation.
The technical readings on the key index were positive, with the MACD Histogram extending a positive bar, while the RSI maintains above the 50 level.
The resistance is envisaged around 1,540-1,550 and the support is set at 1,500-1,510.
Kenanga Investment Bank Berhad (Kenanga) said today that after consolidating the previous week, the FBMKLCI resumed its upward trend last week, breaking past the 1,527 resistance- turned-support level to close 1.4% WoW higher at 1,533.55.
Factors such as expectations of stronger corporate earnings recovery, attractive valuations, stable domestic politics, and a weaker Ringgit against USD likely fuelled investor interest.
Despite the US equity markets’ significant drop last Tuesday due to an unexpectedly high CPI report, regional market optimism remained unaffected. The local market’s response, meanwhile, was muted on last Friday after the central bank’s announced that Malaysia’s 2023 GDP growth fell short of targets, reaching 3.7% YoY (vs. targeted 4%-5% growth) due to weak exports.
This week, the local benchmark index might see increased volatility, especially with US chipmaker, NVIDIA’s quarterly earnings report due on Wednesday. The global equity markets, including Malaysia, have been buoyed by the excitement around artificial intelligence, driven in part by companies like NVIDIA.
Any negative surprises in earnings or outlook from NVIDIA might lead to profit-taking across the tech and semiconductor sectors, potentially impacting broader markets that have seen significant YTD gains.
Moreover, as numerous companies are slated to announce their quarterly earnings before the end of February, sector or stock specific volatility is expected. Nonetheless, the recent increase in trading volume and foreign investment post Lunar New Year suggests that Bursa Malaysia retains a strong near-term outlook.
Technically, the long-term outlook for the FBMKLCI remains bullish, especially with its standing above the crucial 1,509 level, corresponding to its 200-week SMA.
This level is key to sustaining a positive trajectory. Despite anticipating more volatility in the coming week, it’s expected that the 1,509 support level is expected to hold firm, reinforcing the optimistic long-term perspective for the local benchmark index.
All in, Kenanga anticipates continued market optimism in the week’s first half, with an expected increase in volatility during the second half. Key resistance levels are set at 1,570 and 1,600, while crucial support is identified at 1,527, with additional support at 1,509, which coincides with its 200-week SMA.
CGSCIMB said Asian stock markets finished stronger on Friday boosted by rallies in Hong Kong and Japan. The local benchmark FBMKLCI (KLCI) added 5.17pts or 0.34% to end the week at 1,533.55.
Week-on-week, the index added 21.27pts or 1.41%. It was a green day for the sectors with transportation (+0.87%), property (+0.81%) and energy (+0.65%) leading the way.
Only utilities (-0.88%), construction (-0.64%) and healthcare (-0.30%) closed lower for the day.
Trading volume eased slightly to 3.63bn (down from 3.68bn on Thursday) but trading value inched up a tad to RM2.36bn (up from RM2.28bn previously).
Market breadth stayed positive as 553 gainers beat 450 decliners. After a short consolidation in mid-week, the benchmark edged higher on Friday to a new 52-week high.
As the consolidation held above the 1,521-1,527 band, they reckon that this week is likely to be positive again.
Follow-through buying may send prices to climb towards 1,540-1,550 levels next.
The 1,521-1,527 remains the support for now, followed by the 1,500 psychological level next.
Their portfolio stays in risk-on mode this week.
