KLCI to trend higher, test 1,700-level

The FBM KLCI is expected to trend higher today in line with the firm close at Wall Street last Friday, and test the 1,700-point level.  

The S&P 500 ended at its highest level of the year on Friday as oil prices climbed further and investors reassessed this week's stimulus measures by the European Central Bank, according to Reuters.

Oil gains followed an International Energy Agency report that said the oil market may have found a bottom. The IEA report also said production declines were picking up in the United States and other non-OPEC producers, and an increase in supply from Iran was less dramatic than expected, it said.

AllianceDBS Research in its evening edition last Friday said that led by the up close in the preceding day, the FBM KLCI had on March 11 traded higher to 1,698.15 as market participants continued to play on the buying side in anticipation of a higher market.

It said that under the persistent supportive buying interest, the benchmark index was in the green throughout most of the trading sessions before settling near the day’s high at 1,696.54 (up 5.63 points or 0.33%) ahead of weekend. 

“In the broader market, gainers outnumbered losers with 406 stocks ending higher and 385 stocks finishing lower. That gave a market breadth of 1.05 indicating the bulls were in control,” it said.

AllianceDBS Research said the non-follow through selling pressure in the area of 1,688 on March 11 provided opportunity for the risk taking market participants to establish stock positions. However, the buyers were seen not aggressive in their game play.

“This can be seen from the lower market volume of 1.63 billion shares compare to 1.71 billion shares on March 10.

“In fact, the earlier unsuccessful buying attempts to break the 1,700 level on close basis continue to haunt them psychologically.

“Nonetheless, the unfilled upside gap left behind on March 2 and supportive buying patterns in recent days should pave the way for the benchmark index upward with immediate hurdle remains at 1,700,” it said.

The research house said a crossover of 1,700 should see a test of next overhead resistance at 1,730, adding that indicator wise, the MACD was above the 9-day moving average line.

“The analysis of overall market action on March 11 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,698.15 level on March 14,” said AllianceDBS Research.

Based on corporate announcements and news flow last Friday, companies that may be in focus today could include the following: Felda Global Ventures Holdings Bhd, Hibiscus Petroleum Bhd, Chemical Co of Malaysia Bhd, Key Alliance Group Bhd, BHS Industries Bhd, Compugates Holdings Bhd, TAS Offshore Bhd, Only World Group Holdings Bhd, Berjaya Auto Bhd and Bumi Armada Bhd. – The Edge Markets, March 14, 2016.