Funds are likely to continue rotating into smaller-cap stocks

The FBM KLCI is expected to remain under pressure today, reflecting Wall Street’s negative performance overnight and unabated outflows of foreign funds. For now, the key index may attempt to defend the 1,600 psychological level.

Smaller-cap stocks

Additionally, funds are likely to continue rotating into smaller-cap stocks. Investors are expected to trade cautiously ahead of the US CPI data, which could provide a clearer indication of the Fed’s monetary policy direction. 

Sector focus

Consumer sector likely to attract funds, given its relatively lower volatility investors adopt a cautious stance ahead of the US CPI data coupled with the China potential stimulus on next year. Plantation sector may see profit-taking activities following the retreat in CPO prices. 

Technical Commentary

The FBM KLCI formed a bearish candle to edge mildly lower as the key index stay afloat above SMA200. Indicators remained positive as MACD Line floated above the Signal Line, while the RSI steadied above 50. Immediate resistance is located at 1,625. Support is envisaged around 1,570. Source: Apex

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