BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:
The upsides on the FBM KLCI extended for an eighth day, still buoyed by strong buying interest from foreign funds that continue to dominate trades and sending the key index to near the 1,460 level – its highest level in five months.
The gains were also in tune with the broadly higher regional and global indices but the lower liners’ gains were more modest. Still, market breadth was decidedly positive, accompanied by a pick-up in traded volumes to zoom past the 3 billion shares mark again.
Although remaining overbought, there are still few signs of a consolidation as yet and coupled with a largely positive global equity market environment, there should be more near-term upsides on the FBM KLCI.
There will still be few domestic leads ahead of the state elections, hence it will be leads from overseas indices that will help to drive the key index as they are still on a purple patch amid the prospects of easing global equity market headwinds.
However, we also think the upsides could be slower due to extended gains that have left the FBM KLCI overbought with valuations already catching up after its strong gains since the start of 2H 2023.
Therefore, a consolidation remains on the cards for the gains to be digested. The immediate hurdle is the 1,460 level, followed by the 1,464 level while the supports are at 1,455 and 1,450 points respectively.
Malacca Securities Research
The FBM KLCI rebounded strongly to end the month on a firm footing, spurred by China’s State Council remarks to restore and expand consumption across the automobile, real estate, and services sectors.
We expect further gains to come by, supported by the extended buying interest from foreign funds.
The lower liners, however, may extend their consolidation phase with any weakness expected to be well supported by quick bargain hunting activities.
Moving forward, investors will be keeping a close tab on the manufacturing data from Malaysia, China and the US to provide further leads on the health of the economy.
Commodities-wise, Brent crude advanced above US$85/barrel while crude palm oil (CPO0 slipped below RM3,900/metric tonne.
The FBM KLCI formed another bullish candle to close at the highest level since end-February 2023.
Technical indicators stayed positive as the MACD Histogram continues to point upward while the RSI hovered in the overbought territory. Should the key index surges above the 1,460 level, next resistances are located along 1,480-1,500 while the support is pegged around 1,420-1,440. – Aug 1, 2023