BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:
Malaysian stocks continue to fall yesterday amid the renewed weakness among global equity indices that dented sentiments further.
However, the FBM KLCI’s retreat was milder than expected as the selling pressure was more subdued following the recent weakness spell.
Still, market breadth was decidedly negative with losers overwhelming gainers by nearly a 3-to-1 ratio as most of the broader market shares gave way to further selling amid the shaken sentiments.
Malaysian equity market conditions still appear morbid, unable to find traction after the recent spate of selling that has sent the key index to oversold conditions.
Active selling is also leaving the key index with no signs of recovery as yet while downside bias still looms large for the time being, particularly as foreign funds were seen reducing their shareholding of late after they were the net buyers in 3Q 2023.
Nevertheless, the selling spree looks to be abating and this could help to slow the downtrend as the key index attempts to find some solace after its extended downtrend.
This may even allow the key index to mount an overdue recovery as it takes cue from the rebound on Wall Street overnight.
However, any recovery could be mild for now due to lack of buying interest and that the key index may only climb back to the 1,420 level. Further ahead, the resistances are at the 1,424-1,428 levels while the supports are at the 1,410-1,412 levels, followed by the 1,407 level.
Malacca Securities Research
The FBM KLCI has declined for another session but we believe it is currently oversold and may be due for a rebound.
Given the Wall Street rebounded overnight on the back of easing Treasury yields after the US September ADP Employment Report came in weaker than expectations, we expect buying interest to spill over to stocks on the local front.
Investors may still position ahead of the Budget 2024 which will be held next Friday (Oct 13).
Commodities-wise, Brent crude plunged nearly 6%, closing below the US$86/barrel level amid recession fear from an elevated bond yield environment while crude palm oil (CPO) prices traded around the RM3,700/metric tonne level
The FBM KLCI ended lower, falling into the support zone of 1,400-1,415. Despite the MACD Histogram extended another negative bar, the fact that RSI has fallen below 30 could mean the index is oversold and may be due for a rebound in the near term.
The resistance is envisaged around 1,440-1,450 while the support is located around 1,400-1,415. – Oct 5, 2023