BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:
Inter-Pacific Research
After a moribund early session, the FBM KLCI surged in last Friday’s afternoon session to not only erase the entire week’s losses, but to also make some headway.
Friday’s gains were largely the result of selected bargain hunting on glove maker stocks that made strong headway following their recent weakness.
Away from the key index, however, conditions remained insipid with market breadth decidedly negative with the selling picking up pace as traded volumes climbed past the 10 billion-mark.
The burst of foreign buying has helped to lift the key index over the past two sessions and while their participation is positive for the overall market environment, it remains to be seen if the trend will sustain into the coming week.
As it is, the buying could just be merely bargain hunting after Malaysian equities, particularly glove makers, were sold down since late last year and the increases in COVID-19 cases worldwide has renewed the buying impetus.
Nevertheless, Friday’s gains helped the FBM KLCI to extricate from its oversold conditions, thus we think it could also set the stage for further recoveries over the near term as we think glove stocks could still garner buying support.
Therefore, we opine the benchmark index may attempt to make a pass at the next hurdle at the 1,640 level before attempting to climb back to the 1,650 level. The supports, meanwhile, are at 1,620 and the 1,600 points levels respectively.
Malacca Securities Research
Sharp gains in gloves heavyweights came as investors feared for another round of nationwide or certain states lockdown being imposed as buying activities have now catered towards the healthcare sector.
As it is, all heads will turn to the COVID-19 public health measures that are expected to be more stringent today.
With the prospects of economy recovery remain clouded by the rising number of COVID-19 cases, we think that the lower liners may continue to remain under pressured over the near term on mounting concerns over the disruption of supply chain with numerous factories and retail outlets were temporary closed.
The FBM KLCI has formed a bullish candle to extend its gains as the key index remained firm above the 1,600 level.
With signs of recovery stance remain in place, the immediate resistance is located at 1,650-1,680. Downside risks are at 1,600 and 1,580. – Jan 11, 2020
