BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:
Malaysian equities bucked the region’s weakness spell to stage a rebound yesterday, boosted by bargain hunting on selective key index heavyweights that also allowed the FBM KLCI to recoup its intraday losses and to close above the psychological 1,600 points.
The gains, however, were on relatively modest volumes of less than 7 billion shares as most market players opted to remain on sidelines.
Market breadth also remained negative, impacted by the lack of buying interest.
Despite yesterday’s rebound, we are of the view that the Malaysian equity market is not out of the woods as yet.
We see market conditions hampered by the lack of positive catalysts for the market to mount a more sustainable recovery.
We have noted earlier that the market is still waiting for earnings to catch up to the gains that many stocks have attained over the past few months and the “wait-and-see” stance is likely to keep the market mostly subdued for the time being.
In addition, there are also fewer corporate manoeuvres to entice market players back into the market.
While we think that the key index is poised to stay above the 1,600 points level, further gains could still be modest as we see insipid follow-through buying in a market that is devoid of near-term catalysts.
The hurdles are now pegged at the 1,607 points and 1,620 points respectively with the 1,600-level serving as the immediate support, followed by the 1,590 level.
Malacca Securities Research
The FBM KLCI managed to stage a recovery despite the weaker-than-expected inflation data, but we remain cautious on the possible extended gains given the prevailing uncertainties coupled with the lack of fresh leads.
Nevertheless, we think that bargain hunting activities may emerge on selected beaten down stocks as investors’ risk appetite remains strong as defined by a surge in the recent oversubscription rates of initial public offerings (IPOs).
Meanwhile, the rebound in crude oil prices may provide further alleviation to the market sentiment.
The FBM KLCI re-took the 1,600 psychological level after recovering all its intraday losses to finish mildly higher.
Technical indicators, however, remained negative with the MACD Histogram extending another red bar, while the RSI is treading below 50.
With the 1,600 level coming back into focus, any recovery is expected to be capped towards 1,624-1,645. Support will be set around 1,580, followed by 1,560. – March 25, 2021