KLCI eyeing 1,700 points

TheEdge Thu, Jul 11, 2019 11:19am - 4 years View Original


The FBM KLCI climbed to its highest in four months last week. The slightly bullish market is in line with global market performances. Change in the foreign institutional bearish stance has helped boost market confidence.

The KLCI increased 0.6% in a week to 1,682.53 points last Friday. Market was directionless this week and closed at 1,678.97 points yesterday.

Trading volume increased significantly but the most active were mostly lower-capped stocks. The average daily trading volume rose to three billion shares last week from two billion shares the week before. However, the average daily trading value increased to only RM2.1 billion from RM1.8 billion.

Foreign institutions continued to be net buyers last week. From last Tuesday to last Thursday, net buying from foreign institutions was RM115.8 million. Net selling from local institutions and retailers were RM114.9 million and RM900,000 respectively.

For the KLCI, gainers outpaced decliners five to two. The top three gainers were Axiata Group Bhd (4.4% in a week to RM5.20), Sime Darby Bhd (+3.1% to RM2.33) and RHB Bank Bhd (+3% to RM5.76). The top three decliners were Press Metal Aluminium Holdings Bhd (-1.8% to RM4.32), Tenaga Nasional Bhd (-1.7% to RM13.60) and Top Glove Corp Bhd (-1.4% to RM4.84).

Global market indices ended generally higher last week. The US dollar strengthened against major currencies. The US Dollar Index increased to 97.2 points form 96.1 points the week before. The ringgit was unchanged at 4.13 against a US dollar.

Prices of commodities pulled back for a correction. Crude oil (Brent) fell 3.1% in a week to US$64.44 (RM266.78) a barrel last Friday. Comex gold declined 0.8% to US$1,401.20 an ounce. However, crude palm oil managed to inch higher, climbing 0.4% in a week to RM1,958 per tonne. There were not many changes to the market indicators. The KLCI rebounded and remained above the immediate support level at 1,657 points. This indicates that the market is still being supported well. The next resistance levels are at the psychological level at 1,700 points and 1,730 points. The next support level is at 1,636 points.

The KLCI trend remained bullish in the short term above the short term 30-day moving average and the short-term downtrend line. Furthermore, the index stayed above the Ichimoku Cloud indicator. However, the index pulled back for the long term below the 200-day moving average currently at 1,684 points and this indicates that the trend is still bearish in the long term.

Momentum indicators pulled back last week but are generally increasing. The Relative Strength Index and Momentum Oscillator are declining and this indicates a weak bullish trend in the short term. The Moving Average Convergence Divergence indicator continued to stay above its moving average despite pulling back.

Henceforth, we expect the KLCI to continue trending upwards towards the next resistance levels at 1,700 and 1,730 points as long as the index can stay above the immediate support level at 1,657 points.

 

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