Blue chips creep higher as investor stay cautious over Middle East ceasefire

KUALA LUMPUR: There remains a cautious undertone on the domestic market as investors are monitoring closely the ceasefire between Iran and Isreal, although blue chips have slowly crept up on growing optimism.

Following a mixed performance on Wall Street, the FBM KLCI rose 0.45 points to 1,520.24, a marginal increase that remained capped by the overhead 50-day moving average.

Rakuten Trade said the recent rally on the FBM KLCI could be owing to stock accumulation by local institutions, while it as observed some trickling in of foreign funds.

“Nonetheless, we prefer to stay cautious as developments in the middle east remained fluid hence expect the index to trend within the 1,515-1,525 range today,” it said in its review.

From a technical standpoint, Malacca Securities Research said the FBM KLCI formed a bullish engulfing candle on Monday, which has led to buying interest in the blue chips.

It said the local bourse is currently trading at a price-earnings multiple of 14X against a five-year average of 16.5X.

“Despite the positive closing, the key index is still trading below EMA60, with technical indicators showing bullish signals; MACD histogram is expanded above zero, while the RSI is trading above 50.

“Resistance is anticipated around 1,534–1,539, while support is located at 1,499–1,504,” it said in its outlook.

On the broader market, the most active stocks were SNS Network down two sen to 54 sen, Reservoir Link dropping two sen to 20.5 sen and Solution up one sen to 11 sen.