Extended consolidation, rotational play expected next week

KUALA LUMPUR: Extended consolidation and rotational buying in index-linked counters, second and lower liners at Bursa Malaysia is expected for the coming holiday-shortened trading week.
Technically, dealers said the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) supports were located around the 1,780 and 1,760 points level.
An equity dealer said most indicators had pointed out that the psychological mark of 1,800 points would be tested anytime soon.
"Weak follow-through selling interest is observed around the 1,783 points range had prompted supportive buying interest and the market had probably already formed a strong base at around the 1,760 points level.
"As Bursa is now on a consolidation phase and entering a short trading next week, rotational buying with interest distributed among second and lower liner stocks, is expected to continue ," a dealer told Bernama.
Bursa Malaysia and its subsidiaries will be closed on June 12 in conjunction with the Nuzul Al-Quran public holiday.
Trading will resume on June 13 and dealers said the trend on Tuesday would be in tandem with the performance on Wall Street and regional peers.
Another dealer said institutional funds buying in large-cap stocks, from local and foreign, are expected to continue helping the FBM KLCI to remain in the positive territory next week, driven by the steady ringgit and signs of improvement in the global economy.
"But, investors are also expected to adopt a cautious stance ahead of a slew of key events, thus the movement of the key index might be just confined within a tight range next week.
"Investors' risk appetite will be on a cautious stance, awaiting developments from the probe on Felda Global Ventures Holdings Bhd, the impact of European Central Bank's policy decision, outcome of the elections in the United Kingdom and the US Federal Open Market Committee meeting on June 13-14," he added.
Meanwhile, Hong Leong Investment Bank Research opined the profit taking activities may get extended on the bourse.
"Shares on Bursa Malaysia may trade on a weaker tone, amid the softer Brent crude oil price, which was trading below the US$50 per barrel mark.
"The FBM KLCI's support will be located around 1,760. Nevertheless, we think the trading focus will stay within the gloves, semiconductor and steel sectors as volumes have picked up among these industries," it said in a note.
On a week-to-week basis, the FBM KLCI rose 11.94 points to 1,788.89, the FBM Emas Index gained 82.43 points to 12,764.69, the FBMT 100 Index was up 77.81 points at 12,403.14 while the FBM Emas Syariah Index soared 120.79 points to 13,015.14.
The FBM 70 improved 77.11 points to 15,255.82 while the FBM Ace added 29.75 points to 6,382.23.
On a sectoral basis, the Finance Index gained 86.15 points to 16,790.02, the Industrial Index was 3.18 points higher at 3,303.76 but the Plantation Index fell 19.54 points to 7,936.44.
Weekly turnover eased to 11.02 billion units, valued at RM12.01 billion, from 12.34 billion units, worth RM14.01 billion, recorded last week.
Main market volume decreased to 7.40 billion shares, valued at RM11.35 billion, from 8.55 billion shares, valued at RM13.4 billion, transacted the previous week.
Warrants volume improved to 1.43 billion units, worth RM148.19 million, from last week's 1.24 billion units worth RM133.01 million.
The ACE Market turnover contracted to 2.09 billion units, worth RM464.18 million, from 2.46 billion units valued at RM457.36 million, traded previously.
Gold futures contract on Bursa Malaysia Derivatives is expected to see uncertain trading next week, tracking the performance of the US Commodity Exchange’s gold futures market and the US Federal Reserve's decision to hike interest rates, said a dealer.
He said trading would likely to turn bearish as the US dollar might continue to strengthen further and this would hurt COMEX and affect local gold prices.
“However, a strong ringgit will limit the upside of gold price,” he added.
On a Friday-to-Friday basis, the gold futures contract on Bursa Malaysia for spot month June 2017, July 2017, August 2017 and October 2017 fell 14 ticks each to RM174.80, RM175.20, RM175.70 and RM175.85 a gramme, espectively.
Turnover for the week fell to 49 lots, worth RM810,850, from 52 lots, worth RM905,500, recorded last week, while open interest fell to 243 contracts versus 251 contracts previously. — Bernama