The day ahead

BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:

Malacca Securities Research

The FBM KLCI started off the week on a dour note alongside with the weakness across regional peers on the increasing geopolitical tension between US and China.

Still, the FBM KLCI recorded 95.82 points on gain (+6.5% month-on-month) during November 2020. Although we see renewed volatility unfolding, we reckon that bargain hunting activities may take precedence after the sharp fall yesterday.

On the other hand, we think that the lower liners are poised for further upsides, driven by the improved trading liquidity which may extend the rotational play.

Renewed trading interest is developing within the healthcare sector on the prospect of higher weightage in gloves makers in the FBM KLCI. In the meantime, the property sector is expected to remain on course for further recovery owing to the various measures under Budget 2021 to boost home ownership.

While downside risk is prevalent, bargain hunting activities may come onto course with immediate resistance at 1,580, followed by 1,600. Meanwhile, the supports are at 1,540, followed by 1,520.

Inter-Pacific Research

Key index stocks lost significant ground yesterday in what was seen as portfolio re-alignment/profit taking on stocks that made headway over the past month, bringing back the key index to its lowest level in three weeks.

Although the selling was mostly confined to banking heavyweights, other index heavyweights also succumbed to renewed foreign selling that was also prevalent in regional equity markets.

The lower liners and broader market shares, however, mostly bucked the weakness and remained well supported.

Despite the steeper-than-expected retreat, we think that overall market sentiments are improving, riding on the positives of the CoVID-19 vaccines that could soon be available and the worst of the pandemic effects on the global economy is largely over.

Therefore, we view yesterday’s pullback as just profit taking actions after a sterling November that saw the key index gaining as much as 11.5% during the month.

Following yesterday’s steep falls, however, we think that there could be bouts of bargain hunting actions that could help to provide some lift to the market at the start of the new month.

We think the gains could be decent to help the FBM KLCI to bounce back to around the 1,575-1,580 levels. The other resistance is the 1,590 level, while the supports are at 1,550 and 1,540 respectively. – Dec 1, 2020

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