Bursa Malaysia: Weekly Technical Trading Analysis and Forecast for week ahead

Weekly wrap of KLCI: The week started with opening 7.13 points positive, performed with buying sentiments in the beginning and maintained a mixed movement throughout and ended in a positive note. 

The FBM KLCI index gained 16.50 points or 0.89% on Friday. The Finance Index increased 0.65% to 16422.79 points, the Properties Index up 0.21% to 1337.95 points and the Plantation Index rose 1.11% to 7749.53 points. The market traded within a range of 12.87 points between an intra-day high of 1862.58 and a low of 1849.71 during the session.
The KLCI ended the week on a positive note, closing at 1862.58 points. The performance of our benchmark index was in line with overnight gains in US market as positive corporate earnings and rise in crude oil prices overshadowed the weaker performance in US new home sales data in March.
FBM KLCI Week's Performance
Open: 1862.58
High: 1862.58
Low: 1849.71
Close: 1862.58
Change (Points): 16.72
% Change: 0.90%
Market Forecast for week ahead: Market is moving by taking correction on weekly basis it is forcasted to be on positive note next week. As Malaysian government expecting economy to grow between 4.5% and 5.5% this year on the back of strong economic fundamentals. And if Malaysia achieved its fiscal target for 2015, it would be a record of six consecutive years of fiscal deficits.
Weekly Technical view on KLCI
Support 1: 1832
Support 2: 1815
Support 3: 1789
Resistance 1: 1856
Resistance 2: 1880
Resistance 3: 1890
Technical indicators: RSI for this week is 60.649 with CCI at 129.338. Besides, difference line of MACD 8.942 and crossed its signal line -1.022.
ECONOMIC FACTORS:

• Bank Negara governor Tan Sri Zeti Akhtar Aziz said any changes in Malaysia's monetary policy will be based on domestic consideration while stressing that the economy is still staying on a steady growth path. It is anticipated that the central bank may start to cut the overnight policy rate by 25 to 50 basis points.
• Interest rates hike by the United States Federal Reserve (Fed) must happen this year as the uncertainty on the timing of the hike is causing volatility in regional markets.
• The ringgit’s decline is more influenced by non-economic factors and an over-reliance on oil and gas revenue, as well as political issues.
• Moody’s Investors Service today assigned a definitive A3 senior unsecured rating to the US dollar trust certificates (sukuk) issued by Malaysia Sovereign Sukuk Bhd, a special purpose vehicle established by the Malaysian government.An aggregate interest of over US$9 billion (RM32.67 billion) drawn from the issuance of Malaysia's US$1.5 billion sukuk recently signalled foreign investors' confidence in the country's long-term economy fundamentals, a treasury official said.
• Bank of America Merrill Lynch (BofAML) expects Bank Negara Malaysia (BNM) to cut the overnight policy rate (OPR) by 25bps in the second half of the year, due to weaker consumer spending, investments and exports that would lead to significantly slower growth.

Bursa Malaysia Weekly Technical Analysis

Weekly wrap of KLCI: The week started with a higher note The FBM KLCI index lost 5.08 points or 0.27% on Friday. Finance Index fell 0.58% to 16325.86 points, Properties Index up 0.15% to 1322.98 points and Plantation Index down 0.30% to 7794.55 points. Market traded within a range of 8.49 points between an intra-day high of 1849.78 and a low of 1841.29 during the session.

The KLCI extended its losing streak after closing lower at 1844.31 points. The overnight gains in U.S. markets failed to lift our local bourse as absence of positive lead in domestic market weighed on market sentiment.
Market Forecast for week ahead: The benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) is expected to continue its upside momentum and trade within a narrow range of 1,840 to 1,850 points next week, driven by favourable external factors. The momentum would be driven by positive global macro data, reduced geopolitical tension in Iran and broad stimulus from the European Central Bank as well as The People’s Bank of China.
The local equities market ended the first quarter of 2015 firmer on hopes that China would adopt further stimulus measures to bolster growth, supported by reduced Iran-Greece geopolitical tension.
Technical indicators: RSI for this week is 57.544 with CCI at 131.204. Besides, difference line of MACD 2.889 and crossed its signal line 5.784.
ECONOMIC FACTORS:

• The ringgit ended sharply higher against the US dollar in tandem with most emerging Asian currencies on expectation that the US Federal Reserve would postpone increasing interest rates. It rose for a third week as a rally in crude helped shield the region’s only major oil- exporter from bets the U.S. will raise interest rates.
• Shell Malaysia has started construction of the largest upstream oil and gas (O&G) laboratory in Sarawak for deepwater exploration and production activities. It will be operational by end-2016.
• Asian shares advanced close to recent highs on Friday, and were on track for weekly gains, while the dollar gave up some of its overnight rise.
• Employees Provident Fund recorded total annual contribution of RM57.2 billion last year.
• Malaysia’s Industrial Production Index (IPI) grew 5.2 per cent in February 2015 compared with the same month a year ago, driven by growth in the indices of manufacturing, mining and electricity components.
• Malaysia’s crude palm oil stocks (CPO) stocks fell by 4.5 per cent to 907,555 tonnes at end-March 2015 against 950,362 tonnes recorded in the previous month.
• Tenaga Nasional Bhd (TNB) shares on Bursa Malaysia rose this morning on news of an expected increase in electricity demand, moving forward.
• Homegrown condom manufacturer, Karex Bhd shares’ on Bursa Malaysia rose in early trade after the company announced that it is eyeing two to three acquisitions this year.
• Newly established companies or existing companies that expand operations into less developed areas will be eligible for 100 per cent income tax exemption for up to 15 years.