Bursa lacking earlier intensity, correction to continue

Picture Credit: Maybank IB Research

The FBMKLCI rose 3.24pts to 1,825.91 yesterday, led by gains in GENM, YTL and PCHEM. Market breadth, however, was negative with losers outpacing gainers by 685 to 378.

This indicates that the stock market (FBM/KLCI) is losing its earlier intensity and the market correction will continue. Recent correction dragged the market from a high of 1,840 to a low of 1,812.

Maybank IB Research today said another down leg is possible for the stock market.

“For the time being, we believe the benchmark index will head into a consolidation mode. While the candles have bounced off the low, it lacks the intensity to make higher highs.”

This lack of intensity means the stock market will seek to complete the current minor corrective wave. The lowest is seen at 1,793 and highest at 1,812.

A total of 5.39b shares worth MYR3.33 billion changed hands yesterday.

With the ringgit still going strong, there will be continued interest on importers particularly automakers.

Firmer oil price will also have positive spillover on the O&G stocks. “Technically, we expect the benchmark index to extend its gain, likely to trade between 1,815 and 1,830 today. Downside supports are 1,812 and 1,793,” said Maybank.