The day ahead

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

Inter-Pacific Research

Key index stocks succumbed to steeper-than-expected profit taking activities yesterday as they continue to adjust from their overbought conditions following a two-week rally that saw the FBM KLCI climbing some 10%.

Most lower-liners and broader market shares also traced lower on an extended consolidation spell, resulting in both market breadth and depth becoming increasingly negative.

Although we anticipated the market’s retreat, the pullback was more severe-than-expected as the selling/profit taking actions escalated towards the end of yesterday’s session to leave the key index at its intraday low.

However, with market conditions still toppish, we think there remains downside pressure over the near-term that could extend the consolidation spell for a third session and to end the week on a lower note.

We think that there could bouts of support to ease some of the downside pressure and this may cushion the key index’s pullback to the 1,560-1,570 levels for the time being. If the selling escalates further, however, then the key support of 1,550 points will come into play. On the other hand, the resistances are at 1,590 and the psychological 1,600 points respectively.

Malacca Securities Research

Expectedly, the toppish condition that warrants a pullback saw the FBM KLCI retreated. The meteoric rise since the start of the month has seen a shift in sentiment as investors were quick to lock in recent gains.

Meanwhile, the uncertainty over the passing of Budget 2021 also weighed on the recent market sentiment. Going forward, we expect choppiness to prevail with mild bargain hunting activities to take place.

Elsewhere, the lower liners are likely to trend higher, boosted by the liquidity driven market, coupled with the rotational play.

We continue to favour the plantation sector on the back of the rising crude palm oil prices that has yet to demonstrate any reversal pattern at current juncture.

The construction sector is also picking pace in anticipation of packages to be awarded for the flurry of mega-infrastructure projects. – Nov 20, 2020

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