What to expect on Bursa Malaysia this Thursday

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

Inter-Pacific Research

The FBM KLCI extended its upward streak again yesterday for a fifth day on continuing strong buying interest from foreign funds that pushed the key index to its highest level in four months.

The gains also allowed the key index to re-test the psychological 1,450 level as well as bucking the region’s mostly weaker trend.

Market activities were brisk with total volumes jumping to 4.25 billion shares as the broader market also saw increased buying interest with property stocks being the day’s major movers.

The FBM KLCI managed to break out of its technical 200-day moving average with relative ease yesterday, a bullish indicator that could result in further upsides but this is also leaving its technical indicators in an overbought positon.

However, there are still few signs of a retreat as yet and this could point to further near-term upsides as it now looks to breach the 1,450 level.

As domestic leads are still far and in-between, overseas leads will continue to be the impetus for the FBM KLCI to extend its gains.

As it is, key global indices have largely cast aside the US Federal Reserve’s interest rate increase overnight and their upsides could also permeate to stocks on the FBM KLCI to extend its upsides, riding on the continuing bargain hunting from foreign funds.

However, after the extended upward streak, coupled with the toppish technical indicators, we think the upsides may start to slow with bouts of profit taking likely to filter in.

Above the 1,450 level, the resistances are at 1,456 points and 1,460 points respectively. On the other hand, the supports are at 1,445 and 1,436 levels – the latter is also the 200-day moving average line.

Malacca Securities Research

The key index has performed relatively well to hold above the 1,400 level, backed by some fresh buying from foreign institutional participants.

Although there was a bout of positive signs on the local bourse, the lower liners are expected to see a consolidation as market participants may trim their holdings ahead of the upcoming states election.

Expectedly, the US Fed delivered another 25 basis points of rate hike. Going forward, market expectations are skewing towards a potential pause in interest rate hikes which is deemed to be positive for the equities markets.

Still, we are cautious over the extended rally as this may warrant a mild pullback over the near term. Commodities-wise, Brent crude took a pullback below US$83/barrel while crude palm oil (CPO) steadied above RM4,000/metric tonne.

The FBM KLCI formed another bullish candle as the key index strengthen its positive move above SMA200. Technical indicators remained solid as the MACD Histogram added another positive bar while the RSI hovered in the overbought territory.

Next resistances are located along 1,460-1,480 while the support is pegged around 1,400-1,420. – July 27, 2023

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