What to expect on Bursa Malaysia this Friday

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

Inter-Pacific Research

Although the FBM KLCI remained on the upside yesterday, the gains were more modest and the benchmark ended the day off its intraday highs.

It also managed to take out 1,450 level to also reach another new four-month high following the unveiling of the government’s new economic initiatives.

The broader markets also tipped higher with the rotational interest turning to telcos and media stocks as they emerged as the day’s big winners. Market breadth was positive but traded volumes slipped back to below 4 billion shares.

After an extended uptrend that cumulated in the FBM KLCI breaching its 200-day moving average, the FBM KLCI is already overbought and a pullback is already due.

As it is, the key index managed to regain more than 5.0% from its year-low last month and is encouraging to break the dour trend that had engulfed Bursa Malaysia in 1H 2023.

For now, a pullback will permit the FBM KLCI to take a breather from the hefty upsides in the past two weeks and to allow the gains to be digested.

Already the key index may be reaching toppish levels as the upsides seems to be stalling at around the 1,450-level yesterday that could be a prelude for a more meaningful consolidation.

With many key global equity indices also pulling back overnight, the FBM KLCI’s upside could also pause.

However, any pullback is seen as mild for the time being with the immediate support pegged at the psychological 1,450 level which is followed by the 1,445 level. The resistances on the other hand remain at 1,456 and 1,460 points respectively.

Malacca Securities Research

The local bourse remained upbeat following the launch of Madani Economy framework and the National Energy Transition Roadmap (NETR) to boost the Malaysian economy.

We gather that several initiatives such as allowing the trading of smaller size lots and fractional shares as well as enabling automatic transitions for companies listed on the ACE Market to the Main Market will boost trading interest within Bursa Malaysia.

Meanwhile, the lower liners will continue to enjoy rotational play on the back of the calmer market conditions. Elsewhere, we expect some profit taking to emerge on the local bourse, mirroring the weakness on Wall Street overnight.

Commodities-wise, Brent crude recovered above US$84/barrel while crude palm oil (CPO) slipped below RM4,000/metric tonne.

The FBM KLCI managed to recover all its intraday losses to close mildly higher yesterday. Technical indicators remained positive as the MACD Histogram extended another positive bar while the RSI lingered in the overbought territory.

The next resistances are located along 1,460-1,480 while the support is pegged around 1,420-1,440. – July 28, 2023

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