Support 851 / 845 / 835 >>> Resistance 870 / 880 / 885
All eyes and ears on our `mini budget’ announced yesterday as the Finance Minister unilaterally allocates a total of RM60 billion for Malaysia’s 2nd stimulus package tailored to tackle economy slowdown. The cash composite rest at 855.25 after it dropped 2.97 points with 372 mill shares valued at RM790 mill traded at the end of the trading session. Meanwhile, March contract dropped about 2 points to 861.
We expect the index futures to rally in line with the enormous spending on stimulus package that announce by Finance minister yesterday. The delight news is likely to help the market to regain buying momentum as citizens can expect the government is serious to tackle economy slowdown in Malaysia. We may expect the index futures to perform better as the cash composite are likely to rebound on positive rate. Nonetheless, RSI has recovered from oversold territory to neutral position and there is no significant crossover or divergence from MACD as it has recovered from stern negative divergence last week. The resistance level is likely to test at 867 while support would be 857. However, we must remind investors that the “huge” stimulus package is account for almost 9% of GDP, this may give a big hit to our currency and the impact to our economy may not be good. Thus, we remain our neutral view towards the stimulus package and advise investors to be cautious on LONG position. No matter what, in accordance with the strong rebound in overnight DJIA, FKLI is expected to trade higher today.