FBM KLCI up 14 points led by banks & plantations

Stocks in Bursa Malaysia resumed their rally on Wednesday and ended with strong gains on buying interest in selected heavyweights, led by banking and plantation stocks.

The market extended its winning streak for the week, with the benchmark FBM KLCI index hitting another new record high on Wednesday, July 21.

However, profit-taking activities in the afternoon pared earlier gains with the index closing well off its intra-day high, and just a shade below the 1,150 mark.

At the close, the benchmark FBM KLCI rose 14 points to settle at 1148.70 points on a positive lead from Wall Street overnight after several companies, including Apple, Caterpillar and Coca-Cola came out with stronger-than-expected earning results, fueling optimism for more solid results from other US companies this week. The FBM KLCI was in positive territory throughout the day and climbed as high as 1160.61 points before paring gains slightly.

Overall, the performance of the local market in the next few days would depend on the US market as quarterly earnings season kicks into high gear, with the focus on American Express Co, Boeing Co, DuPont Co, Microsoft Corp, and 3M Co.

The Finance Index added 0.83% to 9333.88 points, the Plantation Index rose 1.54% to 5602 points and the Properties Index lost 0.82% to 725.73 points. The market traded within a range of 25.91 points between an intra-day high of 1160.61 and a low of 1134.70 during the session. Actively traded stocks include KNM, GPERAK, PBBANK-CH, PJI, TALAM, IOICORP, AXIATA, RAMUNIA, SAAG and L&G. Trading volume increased to 1.11 bil shares worth RM1.84 bil as compared to Tuesday's 912.65 mil shares worth RM1.49 bil.

Leading Movers were SIME (+25 sen to RM7.80), PUBLIC BANK (+20 sen to RM10.30), COMMERZ (+15 sen to RM10.10), IOI CORP (+10 sen to RM4.94), and GENTING (+15 sen to RM6.05). Lagging Movers were BAT (-50 sen to RM44.75), BERJAYA SPORTS TOTO (-6 sen to RM4.30), TELEKOM (-1 sen to RM2.97), YTL POWER INTERNATIONAL (-1 sen to RM2.18) and UMW HOLDINGS (unchanged at RM6.05). Market breadth was positive with 327 gainers as compared to 290 losers.

Nymex crude oil dropped 75 cents to US$64.86 per barrel.
Crude palm oil 3-month futures lost RM57 to RM2,086 per tonne.
The ringgit was quoted at 3.553 to the US dollar.

It is interesting to note that latest rally has not been accompanied by very high trading volume, or very broad-based gains. This suggests that many investors are still generally cautious, despite the headline index’s large increase. With optimism running high, any signs of major earnings disappointment, could however, derail the current rally. With global markets having chalked up sizable gains in the last two weeks, more profit-taking activities could also emerge.

Incidentally, RHB Research was quoted today that the benchmark stock index might drop after a candle chart signaled a potential end to a rally that lifted the measure to an 11-month high.
The brokerage also said it turned “cautious on the market’s near-term outlook and fear of a potential pullback to as low as 1,095.90.