KUALA LUMPUR (Oct 1): Inter-Pacific Securities Sdn Bhd said the mostly cautious market undertone is likely to prevail for longer as we see external events dictating the FBM KLCI’s near term performance amid the few local market developments.
In its daily bulletin on Friday, the research house said the FBM KLCI gave back most of its recent gains in a pullback on Thursday as quick profit taking became evident on selected telcos, services and banking entities.
It said there was also a pick-up in selling from foreign institutions on the back of the increasing cautiousness over the region’s performance due to China’s energy crunch.
As a result, market breadth remained negative, but the recovery of technology and small cap stocks was sustained, it said.
It said this was particularly so with China facing an energy crisis that could also impact Malaysia’s manufacturing sector.
“However, local commodity players like planters may secure support on higher palm oil prices and the Ministry of Finance’s decision not to impose a Windfall Tax could provide some reprieve.
“Although the downside pressure remains, there should be some light bargain hunting to also provide the much-needed support.
“Therefore, we think that the key index should find support at the 1,530 level with the ensuing support at 1,520 points. On the other hand, the hurdles are at 1,540 and 1,550 points respectively,” it said.
Inter-Pacific said small Cap and technology stocks have done well to buck the insipid market trend, but there could also be quick profit taking ahead of the weekend.
“However, we think these lower liners and broader market shares will sustain their mixed trend for the most over the near term as participation remains low,” it said.