PETALING JAYA: After a Hari Raya Aidilfitri holiday-shortened week, and with most market punters likely to be on extended leave for the local festivities, trading on the local bourse is expected to be range bound this week, analysts said.
“Buying momentum for the week will likely be muted, as most investors will probably remain on the sidelines due to the prevailing holiday mood,” an analyst explained.
“On the bright side, though, the bullish technical indicators do suggest that there is a marginal upward bias for the local bourse,” he added.
Trading on Bursa Malaysia last week ended on Thursday afternoon with the benchmark FTSE Kuala Lumpur Composite Index (FBM KLCI) closing in positive territory at 1,437.78 points, up 3.64 points from the previous day.
Analysts expect external news to play a bigger role in providing market direction during the week.Chartists saw the support level for FBM KLCI this week ranging from 1,410 to 1,430 points, with the key resistant level at 1,450.
Maybank Investment Bank head of retail research, Lee Cheng Hooi, in his report said he expected buying interest to emerge when FBM KLCI fell in the range of 1,420 to 1,433 points, the level where he had tagged the support for the local bourse.
Profit-taking around the resistance areas of 1,440 to 1,450, on the other hand, would cap the market’s rise.
In general, analysts believed there would not be any exciting news in the local economy that could provide positive catalysts for the local stock exchange.
“External news will play a bigger role in providing market direction this week. But the expected dull trade in the local market may limit any positive or negative effects from overseas markets,” a dealer said.
China announced its industrial output and retail sales over the weekend. In the days ahead, the world’s second-largest economy would release its July leading economic index, and that would provide further indications of the pace of its growth for the next few months.
Meanwhile, the world’s largest economy, the United States, will release its retail sales, industrial production and jobless claims figures, among other crucial indicators, this week.
“These data would give us an idea of the strength of its economic recovery. Any better-than-expected numbers will definitely provide a positive catalyst to Wall Street,” a dealer said.
“Regional markets will then pick up the spill-over effect and trace Wall Street’s movement,” he added, while acknowledging there were some renewed concerns among investors over the persistence of the European sovereign debt crisis.
The 16-nation euro zone is also expected to release some key economic indicators such as industrial production and unemployment figures this week. Economic activities in the euro region so far have remained weak and its growth continued to lag behind that of other regions in the world. There are also rising fears that the impact of the region’s austerity drive could stifle its feeble recovery
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