BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:
Inter-Pacific Research
Once again, markets were unable to build on its previous gains and ended on a weaker note yesterday with profit taking streaming in as another lockdown beckons that made many market players jittery.
Among the worst affected were banking stocks that were deemed to be the biggest loser from the impending movement control order (MCO).
Glove maker stocks were also not spared as they also succumbed to a new bout of profit taking. Meanwhile, the wariness sent most market players to the sidelines, leaving traded volumes to dip to just 6.62 billion shares.
The MCO is likely to set-back the country’s economic recovery prospects in 1Q 2021 and this could mean further near-term downside risk as market players assess the impact of the latest lockdown on corporate earnings performance.
At this juncture, however, the impact could be benign as the lockdown is only for two weeks, assuming that it is not extended that could mean further impediments to the country’s economic recovery in due course.
Nevertheless, we think the market’s downsides could be limited as more economic activities are permitted to continue this time and the soon-to-be available vaccines should provide some cushioning effects.
Still, the market’s near-term conditions may remain fluid due to the lingering uncertainties and the downside bias could leave the key index at 1,600 points which is its first major support.
Below that, the supports are at 1,590 and 1,580 points, while the resistances are at 1,629 and 1,631 points respectively.
Malacca Securities Research
Fear over the new lockdown measures has driven profit taking activities on the local bourse, leading the FBM KLCI to close lower after a choppy trading session yesterday.
Following the Prime Minister’s special address on the implementation of tighter movement restrictions in most parts of the country, we expect the market outlook to remain subdued today as further lockdowns may cause further stress to the economy.
However, the negative market sentiment may not last long while the market awaits for vaccine roll-out. The lower liners might also see greater selling pressure.
The FBM KLCI has formed a bearish candle as the key index did not manage to close above the EMA20 level. Downside pressure is expected to remain in place with the immediate support at 1,590 followed by 1,575. – Jan 12, 2021
