BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:
Inter-Pacific Research
Malaysian equities pulled-back more than expected yesterday as market breadth turned overwhelmingly negative amid concerns of tighter lockdowns ahead, resulting in market players accelerating their profit taking/selling activities.
The selling was also widespread as it extended to the lower liners and broader market shares, but glove maker stocks bucked the trend on expectations of firmer results from industry bellwether, Hartalega Holdings Bhd.
The accelerated selling also saw overall volumes picking up for the day.
After breaking successive support levels, including the latest one at 1,580 level, the technical outlook is looking increasingly frail.
This may exacerbate the already weak market sentiments, but we think that there is hope for a quick rebound even as it could be mild at this juncture due to the still cautious market environment.
In our view, the Government’s denial that the movement control order (MCO 2.0) could be prolonged should restore some confidence and prompt some bargain hunting actions after yesterday’s retreat.
As such, we think the key index could climb back above the 1,580 level and may even re-challenge the 1,586-1,590 levels if the momentum regains more traction.
The supports, on the other hand, are at 1,563 and the psychological 1,550 level.
Malacca Securities Research
The selling on the FBM KLCI yesterday could have been overdone with Health director-general Tan Sri Dr Noor Hisham Abdullah having brushed off concerns over MCO 3.0, hence the broader market could perform a relief rebound today.
With regard to glove-related stock, we believe Hartalega’s upbeat result could spill-over to buying support on glove manufacturers and glove proxies today.
However, investors could stay cautious ahead of the release of Malaysia’s Producer Price Index tomorrow. As foreign funds turned into the selling mode, we expect any rebound might face with profit taking activities in the near term.
The FBM KLCI has broken the support of 1,590, closing around the EMA 120 level. For now, indicators have turned negative with the MACD Histogram turning into a red bar, while the RSI remains below 50.
If the key index could not surpass above the 1,600 level, we may see a further pull back going forward with immediate support pegged at 1,570. – Jan 26, 2021
