BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:
Inter-Pacific Research
After showing signs of fatigue a day earlier, the FBM KLCI underwent a mild pullback yesterday to allow it to digest some of the recent gains.
In particular, banking stocks were the main losers after their sterling run-up over the past two weeks. Also, consumer stocks retreated to nullify some of the gains in plantation stocks that were buoyed by firmer crude palm oil (CPO) prices.
Amid the weaker market conditions, traded volumes slipped below the 10 billion shares mark with market breadth also becoming negative.
Despite yesterday’s retreat, conditions on Bursa Malaysia remain toppish after a purple patch over the past six-weeks that has seen the key index gaining some 16.0% which we see as overdone.
We also note that most valuation metrics are toppish and have broadly reflected the potential corporate earnings recovery for 2021.
As such, we think that the profit taking activities are likely to extend due to the overbought conditions but with sentiments still firm, further pullback will be mild with bouts of support and rotational plays helping to support share prices for longer.
With the ample support, we think the key index should find a base at around the 1,665 level which is followed by the 1,660 level. The resistances, meanwhile, are at 1,684 and 1,695 points respectively.
Malacca Securities Research
With Wall Street trending higher overnight, we opine buying support may spill over towards our local front after a two-day pullback.
Traders will mainly continue to build their interest on the back of the Kuala Lumpur-Singapore High Speed Rail (HSR) news.
Meanwhile, we think the surfacing of the RM4 bil Rasau water treatment plant to be called for tender next year would spur trading interest amongst water-related counters.
Besides, some of the commodities such as crude oil, CPO and gold have remained quite resilient over the past few sessions and trading interest should be noted within those sectors.
The FBM KLCI has pulled back over the past two days led by emergence of profit taking activities.
We expect the downside risk to be limited, tracking the positive Wall Street overnight gains. Resistance will be located around 1,700-1,720 while the support is located around 1,620-1,640. – Dec 18, 2020
