What to expect on Bursa Malaysia today

BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:

Inter-Pacific Research

It was still down-trending for the FBM KLCI as it gave up its early session rebound yesterday to end the day just a shade above the 1,600 points level, falling for the fourth successive day.

Sentiments remain guarded ahead of Bank Negara Malaysia’s (BNM) interest rate decision and resulting in market volumes staying on the thin side with losers also surpassing gaining stocks.

Elsewhere, there was also profit taking among the broader market shares following their recent gains that have nudged many of them into the overbought territory.

The interest rate decision could dictate the key index’s performance over the near term with expectations split on whether BNM would reduce interest rates further.

We see the market potentially posting a rebound if interest rates are maintained, but there could be more weakness if rates are cut as it could eat into banks’ margins that are already affected by slower growth due to the weak economic conditions.

Regardless of the interest rate decision, however, the market environment is already largely indifferent with most market players still on the sidelines.

As such, any rebound may be modest, with the downside bias still prevalent due to the lesser support.

We also note that the 1,600 support remains precarious and if it is breached, the 1,590 level will be the next support. The hurdles remain at the 1,610-1,620 levels.

Malacca Securities Research

We expect the negative sentiment to persist over the near term as investors will be waiting for BNM’s decision on the overnight policy rate (OPR) later in the afternoon; any further cut in the OPR may cause downward pressure on banking stocks.

Also, there have been some negative selling activities among the glove heavyweights and we believe it may continue for another session today.

Meanwhile, consolidation might be seen for selected lower liners following the recent gains.

Closing just above its support level, the FBM KLCI may be trading sideways over the near term. However, any further OPR cut today might drag the key index further to below its psychological level at 1,600.

Based on the technical indicators, the FBM KLCI’s momentum could be weakening as RSI and MACD have turned weaker over the past few days.

Hence, the next support zone will be pegged around 1,560-1,580. Meanwhile, resistance will be set around 1620-1,640. – Jan 20, 2021

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