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 among index-linked stocks yesterday with the selling extending for the third consecutive day amid sustained selling of banking stocks on worries over the lowering of the overnight policy rate (OPR) rate in the upcoming Bank Negara Malaysia (BNM) meeting.
While the heavyweights were subdued, the lower liners and broader market shares, particularly technology-related stocks, rallied as rotational interest picked-up pace.
This helped traded volumes to rise, even as the overall market breadth remained negative.
Speculation over the OPR will continue to weigh on the performance of banking stocks over the near term, in our opinion, while other heavyweights could continue to dither in the absence of fresh leads with market players adopting a largely wait-and-see stance.
As it is, the rising domestic COVID-19 cases, coupled with the ongoing movement control order (MCO 2.0), is keeping many market players wary on the impact on the economy and correspondingly, on corporate earnings for 1Q 2021.
Therefore, we think the downside pressure could linger among the index-linked stocks and the consolidation trend is likely to continue for the time being.
As such, the 1,600 support is still in play and if it gives way, the 1,590 level will become the next support. The resistances, meanwhile, are at 1,620 and 1,640 points respectively.
Malacca Securities Research
The FBM KLCI extended another red bar as the talks around OPR cut in the midweek continued to weigh on the major constituents of the key index – banking stocks.
Meanwhile, the technology sector outperformed the local bourse yesterday as investors continued to like the sector for its higher earning certainty.
We reckon the announcement by the Prime Minister of a RM15 bil Malaysian Economic and Rakyat’s Protection Assistance Package (PERMAI) might lift the market sentiment albeit investors’ sentiment to stay cautious ahead of the BNM Monetary Policy Committee (MPC) meeting.
The FBM KLCI broke another support level of 1,620 as market sentiment remains cautious. Technical indicators are slightly negative with the MACD Histogram turning red, while the RSI hooked below the 50 level.
Hence, based on the indicators, the FBM KLCI’s upside could be capped around 1,620-1,640. Meanwhile, support will be located around 1,600, followed by 1,580. – Jan 19, 2021
