BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:
Inter-Pacific Research
The FBM KLCI slipped below the 1,600 level yesterday on sustained funds’ profit taking/selling actions, thus extending its downtrend for a sixth straight session.
As it is, Malaysian equities continue to be affected by the lack of leads and direction, resulting in the increasingly insipid market environment with market breadth also decidedly negative.
The lower liners and broader market shares also succumbed to fresh selling pressure due in part to their already toppish conditions.
Malaysian equities are looking increasingly precarious with few signs of a rebound as yet, hampered by concerns over the rising domestic COVID-19 cases that is likely to disrupt the economy and corporate earnings recovery in 1Q 2021.
The extended movement control order (MCO 2.0) could further leave sentiments guarded amid the increasingly adverse economic performance resulting from the latest lockdown.
At the same time, support on the heavyweights is set to be shallower with the Employees Provident Fund (EPF) possibly trimming more shares to meet the i-Sinar withdrawal needs.
With the support waning, we see the key index remaining pressured in the near term and the downside bias will linger. The 1,590 level is now the immediate support, followed by 1,580 level.
On the other hand, the 1,600 level is the immediate resistance, followed by the 1,615-1,620 levels.
Malacca Securities Research
With Wall Street charging towards its all-time-high region after Joe Biden’s transition into the White House, we expect mild bargain hunting activities to emerge on our local front.
However, following the extension of MCO 2.0 for the six states to Feb 4, we reckon the upside could be capped today as the COVID-19 infection rate is still rising.
Hence, it could be translating to another consolidation day. Nevertheless, we believe market players to rotate into several laggard plays in the stock market.
The FBM KLCI has declined for the sixth trading day by falling below the 1,600 psychological level and currently hovering below the EMA20 level.
Technical indicators are still having negative bias for the time being, with the MACD Histogram extended another red bar, while the RSI is below 50.
We expect the upside to be limited around 1,600-1,620 while the support is pegged at 1,590, followed by 1,570. – Jan 22, 2021
