BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:
Inter-Pacific Research
Malaysian equities regained ground overnight, helped by the passing of Budget 2021 in Parliament – a decision that also meant that the Government remains intact.
This provided some sense of continuity for market players and allowed the key index to post a decent recovery after a relatively indifferent morning session.
The lower liners and broader market shares also managed to rebound amid the improved market sentiments. As expected, market breadth was positive, but market participation was thinner as the broad market conditions were still cautious.
Looking ahead, we think the Malaysian stock market could continue to build-on yesterday’s recovery, helped by expectations of stable policies following the passing of Budget 2021 which was also seen as a referendum on the Government.
The firmer overseas equity performance could also help in the key index’s recovery on hopes of more government stimulus. This could temporarily cast aside the still toppish market conditions with the return of bargain hunting and rotation buying interest.
However, we also think that the lofty conditions could limit the upside potential as selling into strength measures could set in.
Therefore, the 1,685 level has become the immediate resistance, followed by the recent intraday high of 1,695 points. The supports are set at around the 1,660 level, followed by psychological 1,650 points.
Malacca Securities Research
Tracking the positive sentiment on Wall Street, coupled with the approval of third budget reading yesterday, we expect buying interest could spill over towards stocks on the local front.
Also, with the ongoing window dressing activities, the FBM KLCI could be lifted higher as funds maybe rotating back towards value and recovery themed stocks over the next two weeks.
On commodities side, crude oil and crude palm oil has been traded on a firmer tone, while lumber price has shot up strongly since October.
We expect the uptrend mode to continue at least for the near term amid the window dressing period. The MACD Histogram is positive, while the RSI is above 50; suggesting that the positive momentum is intact.
The FBM KLCI’s resistance is located around 1,700-1,720. For support, it is set around 1,640, followed by 1,620. – Dec 16, 2020
