KUALA LUMPUR: The return of foreign funds to blue chips on Bursa Malaysia could keep the FBM KLCI at multi-year highs, although the recent surge in prices and overbought conditions is anticipated to temper further gains.
TA Securities noted that mildly overbought technical conditions imply rising profit-taking interest, suggesting further gains may be limited.
According to the research firm's reading, the index's immediate resistance remains at the October 2015 high of 1,727, with a higher hurdle resting at 1,759, followed by toughter resistance at 1,804.
Inversely, immediate support remains at the September 2016 low of 1,645, with stronger support coming from the 1,610 followed by 1,564.
Rakuten Trade, meanwhile, expects the blue-chip rally to spill over into the smaller caps.
"On the home front, the FBM KLCI surged past the 1,700 mark with ease underpinned by the emergence of foreign buying.
"We believe stock accumulation of blue chips to continue for the time being thereafter we may experience heightening participation in the smaller caps space," it said in a note.
The FBM KLCI slid 2.32 points to 1,705.88 at 9am, as investors took some profit after the previous day's surge.
A weak performance on Wall Street on the back of a decline in JPMorgan Chase's share price after its earnings announcement could also dampen the optimism for an earnings rally in the coming weeks.
JPMorgan Chase's share price fell 4.2% despite fourth-quarter results beating analyst expectations, as traders fretted over US President Donald Trump's proposed cap on credit card interest rates.
Malaysian banks, which had led the FBM KLCI higher in previous sessions, kept most of their gains on Wednesday. Maybank, which had surged to a historical intraday high and closed at a record level in the previous session, slipped just two sen to RM11.04. CIMB fell five sen to RM8.33 and Ambank dipped one sen to RM6.54.
RHB Bank
maintained a steady rise, putting on 13 sen to RM8.18 while Hong Leong Bank added four sen to RM23.36 and Public Bank gained one sen to RM4.65.
Meanwhile, the small caps dominating the most actives list included Ingenieur unchanged at 3.5 sen and MMAG flat at 5.5 sen. Capital A jumped 3.5 sen to 47.5 sen, amid news the distribution of AirAsia X shares to its sharheolders are scheduled to take place this Friday.
