BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:
Inter-Pacific Research
There was more weakness on the FBM KLCI last Friday, losing ground ahead of the weekend as it continues to succumb to profit taking after the market rebounded a few days earlier.
This time, it was the banking stocks that retreated with concerns that the ongoing movement control order (MCO 2.0) could further dampen the economy and the prospects of the banking sector.
In addition, market interest also thinned with volumes slipping to its two-week low, while market breadth was still negative.
With few leads and the MCO 2.0 conditions dominating, market sentiments are likely to stay indifferent and we see Malaysian equities continuing to drift for the time being.
The indifference is also resulting in market participation thinning as more market players are opting to stay on the sidelines as they assess the impact of the latest lockdown on the economy and corporate earnings, which are likely to remain subdued in 1Q 2021.
As such, we think that the range-bound trend could keep the key index lingering within the 1,620 and 1,640 levels for now, with the other support and resistance levels at 1,610 and 1,650 points respectively.
Malacca Securities Research
With the retreat of crude palm oil prices, coupled with the speculation of another round of overnight policy rate (OPR) cut, investors could further reduced their position in plantation and banking heavyweights.
This may translate to potential negative trading tone among banking stocks and dragging down the FBM KLCI this week. Also, market sentiment may remain weak amid the ongoing rising COVID-19 cases despite the re-imposition of MCO 2.0.
On the flipside, we expect some rotational play towards building materials segment amid the firmer commodity prices such as tin, iron and aluminium.
The FBM KLCI broke the support of 1,630 last Friday, closing lower at EMA20 level.
We expect the key index to consolidate before trending higher as both the MACD and RSI indicators are hovering sideways for now; the MACD Line is slightly above zero while the RSI is hovering near 50.
The FBM KLCI’s resistance will be pegged around 1,650-1,660. Support will be set around 1,620 followed by 1,590. – Jan 18, 2021
