Tuesday, April 26, 2011

KLCI Outlook: All Eyes On Fed

Bursa Recap: KLCI ends flat
Regional markets ended mixed in cautious trade amid concern over the impact of China’s aggressive policy tightening to curb inflation and before a slew of corporate earnings reports coupled with the closely watched 26-27 April FOMC meeting.

Share prices on Bursa Malaysia traded on a tight trading range between the upside of 1,526.83 to lower end of 1522.99 (which about 4 points range). The FBM KLCI ended flat with a 1.3 points gain to 1524, spurred by index-linked stocks such as GENTING (+8sen to RM11.58), YTL (+17sen to RM7.99), PBBANK (+4sen to RM13.06), DIGI (+18sen to RM29.00) and IOICORP (+2sen to RM5.35). Market sentiment was cautious with losers leading gainers by 441 to 313, while daily volume and value were off 10% and 13% to 1.06 billion shares worth RM1.03 billion, respectively. Trading was lackluster after long weekend holiday of Good Friday. Investors still preferred to stay on the side line in the absence of fresh leads.

Meanwhile, they are strong RM against the US dollar. Ringgit broke the psychological RM3 barrier to end at RM2.995/US$ for the first time in 13 years, as currency traders bet an interest rate hike is in the offing next month.

FBM KLCI outlook: More sideways consolidation
Despite volatile external markets and expectations of OPR hike next month, the FBM KLCI has been consolidating well over the past few days, building its base above the lower Bollinger band and hovering near its 30-day and 50-day SMAs.

Technically, we think this sideways consolidation trend will continue for a while longer ahead of the outcome of FOMC meeting, May reporting season and 5 May MPC meeting.

Longer term, we are positively biased and expect prices to swing higher once this consolidation ends.

Technically, save for the daily slow Stochastics indicator which offers a slight hope of technical rebound upside this week, the renewed downtrend in MACD and RSI coupled with the close below short term downtrend line (DTL) could signal more sideways consolidation ahead.

Support levels are 1518 (50-d SMA), 1508 (lower Bollinger band) and 1500 whilst upside resistance levels are 1530 (DTL), 1537 (mid Bollinger band) and 1544 (23.6% FR).

Daily KLCI Having More Range Bound Consolidation Within 1510-1540 Band.
FBM KLCI 26-04-2011

Source: HLeBroking

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