The FBM KLCI (+0.18%) closed slightly higher as the index was lifted by buying pressure within the Consumer and Industrial Products services heavyweights in tandem with the regional markets' performance following softer US PPI data, raising the likelihood of the Fed's rate cut in September, Malacca Securities (MSSB) said in a note today (Aug 15).

The FKLI managed to add 6 pts and closed at 1,617 pts on Wednesday, growing firmer above the 50-day SMA line.

RHB Retail Research (RHB) said the index began trading at 1,613 pts, and traded within a range of 1,619 pts and 1,607 pts before closing at 1,617 pts.

The latest bullish candlestick, coupled with the rising RSI, shows the bullish momentum is growing stronger.

The FKLI is likely to see a follow-through price action to test the 1,630-pt resistance.

Breaching the immediate resistance will open the door for further upside movements towards the YTD high at 1,644 pts.

Recall: In a bullish environment, resistance is weak and they are likely to see an upside breakout.

Meanwhile, the 50-day SMA line will act as support.

The bulls will have technical advantage if the index trades above this medium-term moving average line.

Pending a bullish breakout, RHB said they retain the positive trading bias.

They advised traders to hold on to the long positions initiated at 1,565.50 pts, ie the close of 6 Aug.

To minimise the trading risks, the stop-loss threshold is set at 1,570 pts.

The first support remains unchanged at the aforementioned 1,570 pts, followed by lower support at 1,550 pts.

On the upside, the first resistance is eyed at 1,630 pts and followed by 1,644 pts or the high of 18 Jul.

The Day Ahead
The FBM KLCI and FBM70 managed to recover into the gap-down zone last week, while MSSB said that the FBM Small Cap remained in a sideways range as moderate attention was given to small caps after the market rout last Monday.

Meanwhile, on Wall Street, MSSB noted all three major indices rose after official data showed that consumer inflation declined
to 2.9% in July (vs. the consensus of 3%).

With the cooling of inflationary pressures, they believed buying support will pick up on the local front.

In the commodity markets, Brent oil retraced for the second session as Middle East tensions faded, while gold prices maintained above USD2,440 zone.

The CPO prices managed to hold above the RM3,700.

Sectors Focus: Given the positive sentiment in the US, they believed buying interest may spill over into local stocks, specifically in the Technology sector.

They also favour the Construction, Property, Building Materials, and Utilities sectors, as they should benefit from data center and AI themes.

Additionally, the strong Ringgit situation may benefit the Consumer and REIT sectors.

Bloomberg FBMKLCI Technical Outlook
The FBM KLCI index ended higher towards 1,612 level.

The technical readings on the key index were positive with the MACD histogram forming another positive bar and the RSI stayed above 50.

The resistance is envisaged around 1,627-1,632 and the support is set at 1,592-1,597.