BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:
Inter-Pacific Research
The FBM KLCI managed to turn around and returned to the positive territory yesterday as renewed buying on the beaten down glove makers allowed the key index to regain some traction.
Bargain hunting on the glove makers were prevalent in the afternoon session and coupled with the gains in selected index-linked stocks, helped to mask the still mostly negative market breadth as both traded volumes and value tapered again.
The FBM KLCI could be looking to find some measure of stability after its weakness over the past few weeks with yesterday’s rebound.
Part of the recent weakness was due to the resumption of the regulated short selling and the apprehension over glove maker stocks with the COVID-19 vaccine availability.
However, with the key index already nearing oversold, we see increased bargain hunting actions that would help to provide support, even as there is still some tentativeness among market players.
While we see the key index building on the yesterday’s recovery, we also think that the near-term gains could be capped by the ongoing domestic political uncertainties that could still leave many market players on the sidelines.
As such, we think the FBM KLCI may only head up to the 1,615-1,620 levels for now, with further hurdles at 1,630 and 1,642 respectively.
The 1,600 level is still the immediate support, followed by yesterday’s low of 1,589 points.
Malacca Securities Research
Bargain hunting activities emerged on the FBM KLCI as the key index returned into the positive territory in the second half of the trading session, lifted by gains in glove heavyweights.
We reckon that further recovery is in store as investors may start to accumulate on the beaten down gloves stocks.
Gains, however, is expected to be limited by the high number of new COVID-19 cases that may continue to pose a hurdle for a smooth economic recovery.
Elsewhere, the lower liners may creep higher on the back of the rotational play amid the returning of risk appetite into the equities market.
The FBM KLCI has recovered all its intraday losses, forming a hammer candle as the key index closed above the daily EMA60 level. With the selling activities appear to have abated, a recovery may power the local bourse towards the immediate resistances at 1,630-1,660.
The immediate support is at 1,580, followed by 1,550. – Jan 6, 2021
