REVIEW: Bursa Malaysia kicked off the week on a steadier platform, with the FBM KLCI rising 2.32 points to 1,743.25, recovering from the previous session’s declines as investors emerged from the sidelines to seek bargain buys, encouraged by a firmer US markets overnight.
The closely-followed Dow Jones Industrial Average climbed 22.93 points to 23,539.19 the previous Friday due to a spike in iPhone maker, Apple Inc shares.
Over on the New York Mercantile Exchange, crude oil prices jumped US$1.10 per barrel to US$55.64 amid growing optimism members of the Organisation of the Petroleum Exporting Countries (Opec) and other producers led by Russia would extend output cuts.
Surprisingly, stocks in the Asia-Pacific stepped back from recent decade highs owing to an apparent profit-taking activity and the uninspiring moves weighed on the local sentiment.
Hence, the local bourse could not attract solid follow-through buying and for that simple reason, the key index turned range-bound.
That was the flavour of the day, which witnessed the FBM KLCI fluctuating between an intra-day high and low of 1,745.41 and 1,741.43 respectively, a very tight 3.98 points throughout before ending up 1,36 points to 1,742.29 on negative market breadth on Monday.
Nevertheless, the local market opened slightly steadier the next day, after Wall Street scaled a new peak, boosted by optimism about merger activity and underpinned further by optimism that corporate tax cut would bolster corporate earnings.
A rally in regional equities and crude oil prices added to the upbeat mood.
The black commodity rose sharply on aggressive buying as widespread arrests among Saudi Arabia’s elite raise the spectre of instability in the kingdom.
Though there was a bout of fresh nibbling on the domestic front driving Bursa Malaysia up steadily during the day, interest was decisively centered around the quality issues.
Elsewhere, most second liners penny stocks declined and it was clearly painted on the scoreboard.
In spite of the FBM KLCI advancing 8.65 points to settle at the day’s peak of 1,750.94, losers outpaced winners by 378 to 499 on Tuesday.
Theoretically, the bulls were poised to power ahead on Wednesday, with the key index carving out a positive signal the previous day and the Dow eking out a fourth consecutive record high in overnight session.
However, Bursa Malaysia could not live up to technical expectations, as a mixed performance in regional trend and a pullback in crude oil prices, provided an excuse for the local boys to book profits.
Given the dearth of support from investors, the local bourse succumbed to pressure to retreat, dropping 6.74 points to 1,744.20 in sluggish trading in mid-week.
Thereafter, renewed bargain hunting offsetting intermittent selling dominated the floor, as the resumption of a rally in global equities drew investors out from the sidelines and seek value buys.
Blue chips overcame early weakness and later led the way amid institutional support, driving the key index up 2,61 points to 1,746.81 on improved sentiment on Thursday.
And yesterday, the principal index tracked the lower global trend, shedding 4.53 points to 1,742.28 absorbing apparent profit-taking selling.
Statistics: For the week, the major index notched up 1.35 points, or 0.1% to 1,742.28 yesterday, against 1.740.93 on Nov 3.
Weekly turnover stood at 14.823 billion shares amounting to RM11.363bil, compared with 14.801 billion units worth RM11.303bil changing hands the prior week.
Outlook: The local bourse extended the sideways pattern, with the benchmark FBM KLCI recovering marginally on fresh bargain hunting interest the past week.
In spite of the positive close, little has changed, as Bursa Malaysia remained underperformed and continued to be trapped inside the existing small rectangular box, depressed by persistent capital outflow of foreign funds.
Nonetheless, the underlying tone of the local market is likely to improve gradually on the back of bullish crude oil prices.
The black commodity scaled to the highest level in more than two-year recently, on hopes of supply cuts and concerns about political developments in Saudi Arabia.
The appreciation of the local currency against the greenback, where it hit the best level in nearly two months yesterday, will further underpinned local sentiment and fuelled investors’ risk appetite for stocks moving forward.
Based on the daily chart, the key index is expected to face significant resistance at the recent breakdown level of 1,750 points, of which a decisive penetration will probably clear the path for the bulls to challenge the 1,770-point or the greater 1,800-point psychological barrier.
Technically, indicators are still painting a tricky landscape.
While the daily moving average convergence/divergence histogram is seen improving towards the neutral line, the weekly peer sustained the downward expansion to stay bearish.
Elsewhere, the daily slow-stochastic momentum index has topped out near the overbought area but the weekly peer is ticking up from the oversold area, implying Bursa Malaysia could still be trapped until a stronger catalyst emerges.
Initial support is seen at 1,740 points. A crack of the 1,730-point line is likely to drag the key index down to the 1,700-point mark.