Bursa Malaysia ticked lower again on Monday, one session after ending the two-day slide in which it had slipped more than 10 points or 0.6 percent.
The Kuala Lumpur Composite Index now sits just beneath the 1,550-point plateau and it’s looking at another soft start again on Tuesday.
At 9.15am, the FBMKLCI dipped -2.08 points to open at 1,545.52.
RHB Retail Research in a note today (Feb 27) said the FKLI’s movement erased all its intraday gains yesterday to close in negative territory, settling 3 pts lower at 1,549 pts.
The index futures’ movement opened at 1,552 pts and attempted to rise towards the day’s high of 1,558 pts before strong profit-taking kicked in.
It then fell below the opening level, hitting the day’s low of 1,547.50 pts before the close.
The latest black body candlestick with long upper shadow suggests market sentiment is weakening – we will likely witness a pullback in upcoming sessions towards the 1,515-pt support.
This solidifies the house expectations from their previous note on strong selling pressure persisting beneath the 1,560-pt resistance.
Nevertheless, the medium-term outlook remains positive, with the RSI still in positive territory at 66%.
The index’s movement’s bullish structure above the ascending 50- and 200-day SMA lines solidifies the overall uptrend – allowing it to stay intact.
Despite the likely price weakness in the upcoming sessions, based on the medium-term outlook, RHB retain their bullish bias.
Traders should retain the long positions initiated at 1,455 pts or the close of 3 Nov 2023. To mitigate the trading risks, the stop-loss threshold is placed at 1,500 pts.
The immediate supports are marked at 1,515 pts and 1,500 pts. Meanwhile, the nearest resistance is eyed at 1,560 pts. This is followed by the 1,600-pt level.
Malacca Securities ( MSSB) the FBMKLCI (-0.10%) ended lower, in line with the negative performance in the regional stock markets, dragged by Plantation, Banking and Gaming heavyweights.
On the broader market, the Transportation & Logistics sector (+1.09%) was the leading sector, while the Technology sector (-1.27%) declined.
The Day Ahead
The FBMKLCI slid lower for the session dragged by Gaming heavyweights. Meanwhile, the US stock markets ended on a negative tone as the market is taking a cautious stance for the near term ahead of several economic data to gauge the Fed’s easing cycle going forward; this week data include (i) US GDP (Wed), (ii) Core PCE (Thu), (iii) unemployment claims (Thu) and (iv) US Manufacturing PMI (Fri).
Meanwhile, MSSB expect buying support to return on the local front after several consolidation days as corporate earnings will be focused.
On the commodity market, the Brent oil price hovered around USD80-83/bbl as concerns over the Red Sea persisted.
Sectors focus: YTL related companies could remain in focus as they are deemed cheap in terms based on forward valuations. Meanwhile, they like the Technology sector with the release of stronger results from D&O amid stronger demand from the automotive segment.
Also, a strong set of results from PPHB could provide an upside opportunity for the Packaging industry.
Still, they favour the Consumer and O&G sectors as ABLEGLOB, LAYHONG and DELEUM recorded solid growth this quarter.
Bloomberg FBMKLCI Technical Outlook
The FBMKLCI ended lower forming a 4-bar consolidation pattern. However, the technical readings on the key index were mixed, with the MACD Histogram forming a rounding top formation, while the RSI maintains above the 50 level.
The resistance is envisaged around 1,560-1,570 and the support is set at 1,520-1,530.
Maybank Investment Bank (Maybank IB) said the FBMKLCI Index started the week on a weaker note amid a mixed performance across the regional equities markets.
At day’s end, the benchmark index fell 1.51pts, or 0.10%, to close at 1,547.60pts, led by decliners of SIMEPLT, GENM, GENTING and SIME.
Market breadth was negative with losers outnumbering gainers by 633 to 443. A total of 3.74b shares valued at MYR3.12b changed hands.
Sell-off in the plantation sector continued for the second consecutive day and it’s testing the 50-day EMA line while renewed interest in both telco and transportation names yesterday kept both sector indices above the 20-day EMA line.
Technically, Maybank IB expects the FBMKLCI Index to range between 1,540pts and 1,560pts today, with supports at 1,505pts and 1,477pts.
CGSCIMB said Asian equities traded in a narrow range as the ongoing rally in Japanese shares helped offset declines in South Korea and China.
The local benchmark FBMKLCI (KLCI) eased 1.51pts or 0.10% to start the week on a softer note at 1,547.60.
Most sectors closed negative in tandem with the benchmark KLCI led by losses in technology (-1.27%), plantation (-1.22%) and FBMACE (-0.82%).
Transportation (+1.09%), telecommunications (+1.02%) and energy (+0.68%) were among the top gainers yesterday.
Trading volume fell to 3.74bn (down from 4.07bn on Friday) while trading value eased to RM3.12bn (down from RM3.21bn previously).
Market breadth remained negative as 633 decliners beat 443 winners.
The benchmark formed a black candle yesterday, which suggests indecision among market players.
CGSCIMB continue to think that the current pullback is likely to be temporary. Since there was no follow-through buying yesterday, the index is likely to continue to chop sideways for another day or two before the next wave higher takes place.
The index is likely to climb closer towards 1,570-1,583 once this consolidation ends.
The immediate support is now at 1,534-1,538 followed by the rising trend line (currently at 1,536).
Closing below the rising trend line may signal that a deeper correction may be taking place.
Their portfolio stays in risk-on mode this week.
