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 headed higher again yesterday with Public Bank’s generous bonus issue prompting renewed interest among banking stocks and sending the key index to its highest level in some 18 months.
Banking stocks’ gain also helped to counter the weakness in glove maker stocks even after Top Glove reported a 20-fold improvement in its quarterly earnings.
Elsewhere, market conditions were mostly on the weaker side as profit taking took hold among the lower liners and broader market counters.
There is no change to our view that the FBM KLCI is becoming increasingly toppish after the past few week’s gains that we believe have more than reflected the potential corporate earnings recovery in 2021.
This also leaves 2020’s valuation on the expensive side with 4Q 2020 earnings likely to be tempered by the new round of selective lockdowns.
While optimism over the availability of COVID-19 vaccines have improved market sentiments, the gains are also deemed to be excessive.
As such, we maintain our view that the key index is already due for a consolidation for the recent gains to be digested even as there are still few inklings of a pullback as yet due to the ongoing bouts of window dressing activities.
Further gains are likely to prompt selling into strength actions and may even be a prelude to a consolidation spell, in our view.
For now, the hurdles are at 1,650 and 1,656 points while the supports are at 1,631 and 1,620 respectively.
PublicInvest Research
The FBM KLCI might trend lower today as US stocks ended lower Wednesday, a sharp reversal from a round of intraday records, as investors migrated out of big technology outperformers into more downtrodden sectors in the belief that any new fiscal stimulus plan from Congress and a vaccine roll-out will restore economic normality next year.
The Dow Jones Industrial Average fell 105.07 points, 0.4% to finish at 30,068.8, but off session lows.
Gapping up to extend its current uptrend, the FBM KLCI climbed 14.83 points to end at 1,646.53 yesterday.
Nevertheless, market breadth remained negative as decliners outnumbered gainers 743 to 524.
At this juncture, the index is anticipated to trend higher, re-testing its immediate resistance level of 1,652 in the near term.
Support levels for the index are at 1,636, 1,622 and 1,610, while the resistance levels are at 1,652, 1,664 and 1,680. – Dec 10, 2020
