BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:
Inter-Pacific Research
The key index remained in a consolidation trend, surrendering all its intraday gains to end the day virtually unchanged on late profit taking/selling actions.
The early day’s gains were helped by Bank Negara Malaysia (BNM) keeping interest rates unchanged, but the late afternoon selling on selected index heavyweights kept a lid on the FBM KLCI’s performance.
Nevertheless, market breadth was positive as many lower liners regained traction despite the thin trades.
We think that the market’s near-term conditions will remain guarded amid the rise in local COVID-19 cases that may require a longer lockdown to control the outbreak.
An extended movement control order (MCO 2.0) would affect corporate earnings recovery in 1Q 2021 and this is likely to prolong the cautious trend engulfing Bursa Malaysia stocks currently.
Consequently, we think the consolidation trend among the index linked stocks is likely to persist and this could leave the key index trending within a tight band over the near term, with the downside pressure also remaining.
The immediate support is at 1,600 points followed by the 1,590 level. The hurdles, meanwhile, are at 1,620 and 1,640 respectively.
Malacca Securities Research
Tracking the strong gains on Wall Street overnight after Joe Biden was sworn in as the 46th US president, we expect to see a rebound on the local front especially on the technology sector.
Nevertheless, market volatility remains in place amid the expansion of MCO 2.0 to all states except for Sarawak due to the worsening COVID-19 situation.
On the banking sector, we expect trading interest to be seen after BNM’s move to keep the interest rate unchanged until the next meeting.
Meanwhile, we expect the vaccine roll-out plan that could come in 1Q 2021 to benefit the distribution segment.
The FBM KLCI managed to hold above the psychological level at 1,600 albeit selling pressure was noticed in the final trading hour.
The key index is expected to move sideways with support level pegged at 1,570-1,590 and resistance level at 1,620-1,640.
Indicators remained negative for the third straight trading session as the MACD Histogram has extended another red bar while the RSI remains below 50. – Jan 21, 2021
