BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:
Inter-Pacific Research
Profit taking activities dominated trades yesterday, ending the FBM KLCI’s upward streak amid its already extended overbought conditions.
Selling activities were prevalent among heavyweight plantation and banking stocks but industrial products and services stocks were the biggest losers for the day.
The lower liners and broader market shares also retreated and resulted in losers nearly twice the number of gainers. The selling spree also saw traded volumes surging to 3.8 billion shares yesterday.
Despite succumbing to profit taking yesterday, the key index has managed to stay above the psychological 1,450 level at the close, suggesting that the uptrend is still intact for the time being.
However, with conditions still being overbought, the consolidation spell could still persist for a second day as it continues to adjust from its bout of overbought.
This could put the 1,450 level at risk of being breached although the generally positive market outlook is likely to hold for the time being, underpinned by improved appetite for equities globally while the pullback is deemed healthy for the recent gains to be digested.
If the 1,450 levels fail to hold, the supports are lowered to 1,447 points and the 200-day moving average line of 1,437 points respectively. On the flipside, the hurdles are at the 1,455 and 1,460 levels – the latter is the most recent high.
Malacca Securities Research
The FBM KLCI took a breather as selling pressure emerged in selected index heavyweights with foreign funds turned net sellers for the first time in six trading days.
Meanwhile, the S&P Global Manufacturing PMI stood at 47.8 in July 2023, suggesting that sustained slowdown in business conditions has some way to go before demand recovers.
Nevertheless, we opine that the pullback is healthy to allow recent gains to be digested. The lower liners are also experiencing a consolidation with traders opting for the wait-and-see approach ahead of the six state elections on Aug 12.
Commodities-wise, Brent crude slipped below US$85/barrel while crude palm oil (CPO) hovered slightly below RM3,900/metric tonne.
The FBM KLCI formed a bearish candle accompanied by softer trading value. Technical indicators, however, stayed positive as the MACD Histogram remained in the positive territory while the RSI hovered in the overbought zone.
Should the key index advanced 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 2, 2023
