business
KLCI to face profit taking pressure
Bursa Malaysia may face pressure from profit taking as most global markets took a tumble from China's weak economic data. – The Malaysian Insider file pic, March 9, 2016.The FBM KLCI is expected to face profit taking pressure today in line with the overnight decline at most global markets on the back of weaker economic data from China.
World stock markets declined yesterday after weak data from China reignited worries about a global economic slowdown and oil prices pulled back from recent strong gains, according to Reuters.
China's February trade performance was worse than economists expected, with exports tumbling the most in over six years, days after leaders sought to reassure investors the outlook for world's second-largest economy remains solid, it said.
AllianceDBS Research in its evening edition yesterday said the FBM KLCI had on March 8 crossed into the 1,700 zone to reach a high of 1,706.08 after opening the day on a positive note.
However, it said non-follow through buying interest in the area of 1,706.08 prompted profit taking activity to kick in.
It said this pulled the benchmark index down to a low of 1,684.53 before settling near the day’s low at 1,687.86 (down 10.07 points or 0.59%).
“In the broader market, losers outnumbered gainers with 568 stocks ending lower and 286 stocks finishing higher. That gave a market breadth of 0.50 indicating the bears were in control,” it said.
AllianceDBS Research said the benchmark index crossed into the 1,700 zone again on March 8, but it failed to sustain its position above the 1,700 level.
“This showed that market participants were unwilling to play a more aggressive buying game.
“Many market participants had instead taken advantage of the market rise to liquidate their stock positions in an attempt to cut their losses short.
“Given the inability of FBM KLCI to close above 1,700 for 3 consecutive days, the market is thus expected to consolidate further with immediate support seen at 1,685,”it said.
The research house said a small consolidation platform between 1,685 and 1,710 should help to equalise the demand and supply imbalances created in recent days.
However, it said a downside violation of 1,685 again would put pressure on the benchmark index down to the next support zone, 1670 – 1,675.
It said that indicator wise, the MACD was above the 9-day moving average line.
“The analysis of overall market action on March 8 revealed that buying power was weaker than selling pressure.
“As such, the FBM KLCI would likely trade below the 1,684.53 level on March 9,” said AllianceDBS Research.
Based on corporate announcements and news flow yesterday, companies that may be in focus today could include the following: Sona Petroleum Bhd, Inari Amertron Bhd, GSB Group Bhd, APFT Bhd, Dolphin International Bhd, Advance Synergy Bhd, Microlink Solutions Bhd and Xidelang Holdings Bhd. – The Edge Markets, March 9, 2016.
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