BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:
Inter-Pacific Research
The key index gained further ground yesterday on bouts of foreign buying on banking heavyweights and selective index-linked stocks.
At the same time, the lower liners and broader market shares also rose on continuing mild bargain hunting activities which allowed market breadth to remain on the positive side, but overall traded volumes were thinner.
It remains to be seen if the 1,600 points level can be breached convincingly despite the recent market strength that was largely helped by the nibbling by foreign funds.
We see market sentiments as largely neutral for the time being, devoid of new catalysts from both domestic and foreign sources.
In addition, we do not think the effects of the latest lockdown has been reflected as yet with both the economy and corporate earnings recovery to slow ahead.
This could lead to stocks seeing a re-rating, hence we opine the downside risk would persist over the near term.
Therefore, we see quick profit taking activities on the horizon that could curtail the key index’s upward trajectory. As such, the 1,600 points level will remain a formidable hurdle for now.
Above 1,600 points, the other resistance is at 1,608 points. On the downside, the supports are at 1,587 and 1,580 points respectively.
Malacca Securities Research
The FBM KLCI climbed for the second session as market sentiment was aided by the higher crude palm oil (CPO) and Brent oil prices on the back of OPEC+ decision to gradually restore supply to the market amid stronger demand in view of the COVID-19 recovery.
CPO price surged more than 5.0% while the Brent oil price stayed firmer above US$70/barrel.
Despite the rising COVID-19 cases, we expect the expedition of vaccination roll-outs and full movement control order (FMCO) should eventually translate to market players focusing on recovery theme at least for the near term.
The FBM KLCI extended its gains, crossing above the 1,595 level. Technical indicators turned positive as the MACD Histogram has extended a green bar, while the RSI was hovering above the 50 level.
Should the rebound sustain above 1,595, the next resistance will be located around 1,600-1,620, while the support is set at 1,555-1,565. Otherwise, the key index may trade range bound within 1,600 level. – June 3, 2021
