BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:
Inter-Pacific Research
Renewed bargain hunting activities in the afternoon session from foreign sources helped the FBM KLCI to mount a rebound yesterday and climbed back above the 1,590 level.
The positivity also spurred similar bargain hunting among the lower liners and broader market shares, reversing their steep falls a day earlier.
The gains were also due in part to the rising commodity prices that helped the energy and plantation indices higher with market breadth returning to the positive side, albeit total volume continues to thin.
Although Malaysian equities managed to bounce yesterday, there is no change to the overall market environment that is still broadly insipid, tempered by the unrelenting local COVID-19 infections and the ongoing movement control order (MCO) that is leaving more market players on the sidelines.
We also think concerns over slower corporate earnings recovery amid a still uncertain economic environment could continue to weigh on sentiments for longer. Under the prevailing environment, the touch and go market conditions will still be prevalent, which we see quick profit taking actions potentially setting in after the past few session’s rebound.
This could slow further upsides and we think the psychological 1,600 hurdle could remain formidable for the time being.
Further ahead, the other resistance is at the 1,610 level, while the 1,580 level is the immediate support, followed by the 1,573 level.
Although many of the lower liners and broader market shares regained some traction yesterday, their near-term outlook is still one of cautiousness, in our view.
The thinning market participation, coupled with fewer leads, is likely to deter a more meaningful rebound and we think these stocks would continue to drift over the near term.
Malacca Securities Research
The FBM KLCI tracked regional uptrend to close at intraday high on bargain hunting following the selldown on broader market in the previous session, as well as the global commodities rally.
CPO price surged close to 5% to end above RM4,450 in tandem with the rise in soybean oil on estimation of weaker output in Malaysia.
Nevertheless, the commodities-fuelled rally may consolidate over the near term if concerns over stricter lockdown persist amid high COVID-19 infection rate in the country.
Sector focus: Investors may look at plantation stocks given the sharp rise in CPO price. Besides, we expect to see some technical rebound in the technology sector ahead of the reporting season as the stocks might be oversold after the recent selldown.
The FBM KLCI extended its gains for the third straight session, pointing towards the 1,600 psychological level. Technical indicators remained mixed as the MACD Histogram has extended a green bar, while the RSI was hovering below the 50 level.
To confirm an uptrend, the key index should cross and stay above the 1,600 psychological level, support is located around 1,555-1,565. – May 19, 2021
