BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:
Inter-Pacific Research
Foreign buying continues to lift the key index last Friday with late buying reversing the early day pullback and sustained interest on some index heavyweights after the Prime Minister announced his cabinet.
Glove maker stocks were among the main movers on the back of rotational buying but many lower liners and broader market shares saw continued profit taking with market breadth remaining on the negative side.
There is no change to our view as we see the key index remaining toppish after it gained about 100 points in the past three weeks. We see this as already overdone with foreign funds playing catch-up in the gains of most global equity indices year-to-date.
We believe the euphoria over the calmer political environment and the re-opening of more economic sectors has run its course. This may prompt some profit taking as the key index looks to adjust from its bout of overbought.
We also think the move to suspend intraday short selling until the end of the year has also been largely reflected in the market’s recent run-up.
As such, we see the 1,600-points level becoming a significant hurdle for the FBM KLCI to pass over the near term amid the already overbought market conditions.
On the downside, the supports are at 1,580 and 1,570 points respectively. The other resistance is at the 1,610 level.
Malacca Securities Research
The FBM KLCI maintained its winning streak throughout the week, spurred by strong buying interest from foreign funds (positive inflow streak: five days of cumulative net buying: RM964.3 mil) amid easing political risk and reopening of business activities.
We believe the positive sentiment will continue to be supported by the Prime Minister’s target to achieve a vaccination rate of over 50% for adult population in another six states by end-September, while considering to move Klang Valley into Phase 2 of the National Recovery Plan (NRP).
Nevertheless, trading may slow down ahead of the National Day public holiday. Meanwhile, crude oil prices closed above US$72/barrel while gold prices shot up above US$1,800 level.
The FBM KLCI witnessed six straight sessions of gains as the key index closed at highest point since early-June.
Despite the MACD Histogram extended a green bar, the RSI is overbought above 70. Hence, the resistance could be located around 1,600 while the support is pegged along 1,580. – Aug 30, 2021
