FBM KLCI (NEUTRAL)

• The FBM KLCI opened last week positively, breaking and sustaining above the 1,500 level. However, it faced profit-taking in the subsequent days due to diminished buying momentum, influenced by certain small-cap stocks hitting limit down and certain brokers' cash upfront requirements. Despite the market's volatility, the benchmark index managed to recover some ground on Friday, closing the week down just 0.97 points at 1,486.37. The weekly turnover decreased to 25.9b units valued at RM14.7 b, compared to 27.1b units worth RM16.7b the previous week.

• The upcoming shortened trading week is expected to be shaped by the earnings reports of major U.S. tech companies. Meanwhile, the market may receive a positive boost from the appointment of Malaysia's new Agong on 31 January. Despite this, the negative sentiment caused by recent forced selling in some stocks could continue, but it is expected to settle down as the month draws to a close.

• Technically, the FBM KLCI has exhibited a double 'Doji' candlestick pattern in its weekly chart, indicating market indecision and a potential trend reversal. The robust performance of the U.S. market last Friday might positively influence the local bourse at the beginning of the week. However, a period of sideways consolidation is expected after several volatile trading sessions. A new uptrend could be established if the index decisively breaks through its key resistance level at 1,504. On the other hand, a break below last week's low of 1,477 could signal the start of a new downtrend.

• Key resistance levels for the index are at 1,500 and 1,504, with crucial support at 1,477 followed by 1,470.

Source: Kenanga Research - 22 Jan 2024