Bursa Malaysia on Monday ended the modest two-day winning streak in which it had collected almost 7 points or 0.5 percent.
The Kuala Lumpur Composite Index now sits just beneath the 1,540-point plateau and it may take further damage on Tuesday.
RHB Retail Research in a note today (Mar 26) said the FKLI failed to rebound higher on Monday, resuming its correction after falling 9.50 pts to settle at 1,533.50 pts – testing the immediate support of 1,533 pts.
The index opened lower at 1,538 pts and oscillated negatively between 1,542 pts and 1,531 pts, before closing near the support.
The latest price action indicates that the recent rebound was short-lived, and is likely to see a retracement towards the 50-day SMA line or the next support level at 1,520 pts.
The medium-term uptrend structure remains intact given the index is still trading above the ascending 50-day SMA line.
Expect the index to form an interim base near the 50-day SMA line, and followed by a rebound in the medium term towards the recent high of 1,563 pts.
For now, they maintain a positive bias.
They recommend traders to keep the long positions initiated at 1,455 pts, or the close of 3 Nov 2023.
To mitigate the downside risks, the trailing-stop is set at 1,520 pts.
The first support remains unchanged at 1,533 pts – 20 Mar’s low – followed by 1,520 pts.
Meanwhile, the first resistance is pegged at 1,550 pts, followed by 1,563 pts or the high of 28 Feb.
Malacca Securities (MSSB) said the FBMKLCI (-0.31%) ended lower, in line the negative performance in the regional stock markets, dragged by losses in Telco and Utilities heavyweights.
On the broader market, the Transportation & Logistics sector (+1.63%) gained, while the Healthcare sector (-0.40%) declined.
The Day Ahead
The FBMKLCI ended lower as profit taking activities emerged within selected heavyweights, but focus was seen in Small Cap stocks as FBMSCAP rose 0.11%.
In the US, profit taking appeared across the board offsetting gains in NVDA.
The house believes the market will continue to monitor the upcoming economic data such as the (i) US GDP, (ii) unemployment claims, (iii) pending home sales as well as (iv) core PCE price index.
Despite the weaker sentiment abroad, they expect buying support to continue on the local front, especially in the small cap segment.
On the commodity markets, Brent oil rebounded and closed above USD86/bbl, underpinned by ongoing supply cuts by the OPEC+ members and persisting geopolitical tension in the Middle East.
Sectors focus: Still, they think buying interest may build within the Technology sector with the recovery in the earnings in the recent quarterly results.
Meanwhile, MSSB like the Construction as the potential revival of the KL-SG HSR coupled with the data center investments that is expected to increase going forward will provide support to the sector.
Besides, they favour Consumer, Solar, Chemical, Finance and O&G; the latter is likely to stay firm amid the stronger underlying crude oil price.
Bloomberg FBMKLCI Technical Outlook
The FBMKLCI index ended lower consolidating around the 1535 level.
The technical readings on the key index were negative, with the MACD Histogram extending a negative bar, and the RSI dipping below 50.
The resistance is envisaged around 1,550-1,555 and the support is set at 1,520-1,525.
CGS International said most Asian stock markets finished lower on Monday with Japan’s Nikkei 225 (- 1.16%) leading the losses.
The local benchmark FBMKLCI (KLCI) gave up 4.85pts or 0.31% to end the day at 1,537.54. It was a mixed day for the sectors with the largest losses coming from healthcare (-0.40%), REIT (-0.39%) and telecommunications (-0.34%).
The top gainers were transportation (+1.63%), construction (+0.61%) and energy (+0.54%). Trading volume tapered off to 3.76bn (down from 5.09bn on Friday) while trading value declined slightly to RM2.56bn (down from RM2.69bn previously).
Market breadth stayed negative as 476 gainers lost out to 587 decliners. The benchmark closed below the 20-day EMA again with a black candle yesterday.
Prices appear to be fluctuating between the said EMA and the uptrend line from the 1,518 low. The current sideways consolidation is likely to extend for a while longer.
Once this consolidation ends, CGS expects the KLCI to ascend further. The 1,525-1,531 level acts as the minor support, followed by the 1,508- 1,521 band. On the upside, 1,545 acts as the immediate resistance before KLCI moves to retest the 20-month high at 1,559 and beyond. The longer-term resistance is placed at 1,570-1,583. CGS’s portfolio stays in risk-on mode this week.
