Share prices on Bursa Malaysia are likely to trade within a narrow band next week with investors expected to remain on the sidelines amid profit-taking, dealers said.
They said trading on the local bourse as well as regionally could remain cautious next week due to lingering concerns over further monetary tightening policies by China's government to combat inflation.
However, losses on the local market could be capped by continuous buying by local funds and positive news such as the announcement of construction projects listed in Budget 2011, dealers said.
"The market is tired," said Affin Investment Bank's Head of Retail Research Dr Nazri Khan, adding that profit taking would continue further as the market experienced serious technical correction last week.
He said the market has broken two important support levels, 1,560 and 1,550 after gaining 92 per cent from March 2009.
"Market consolidation has started earlier than expected by most analysts who believed the correction will happen after the Chinese New Year," he said.
This situation will last for a while, normally within two months as foreign funds would continue to reduce positions, Nazri said.
He said support level was expected at 1,530 while resistance at 1,515 and 1,500, while stocks in focus were consumer-related.
Meanwhile, MIDF Research expected the potential for an overnight policy rate (OPR) hike next week may be the catalyst for the market to break the 1,600 points level.
Banking stocks were expected to rally if the central bank raises the OPR by 25 basis points (bps), next week, it said in a research note.
"We continue to hold our view that Bank Negara will raise OPR by between 50-75 bps in 2011, with a 40 per cent possibility of a 25 bps hike in the first-half and the balance in the second-half 2011," it said.
For the week just ended, share prices on Bursa Malaysia saw bearish trade due to persistent sell off in key blue chips after the recent strong rally.
They said trading on the local bourse as well as regionally could remain cautious next week due to lingering concerns over further monetary tightening policies by China's government to combat inflation.
However, losses on the local market could be capped by continuous buying by local funds and positive news such as the announcement of construction projects listed in Budget 2011, dealers said.
"The market is tired," said Affin Investment Bank's Head of Retail Research Dr Nazri Khan, adding that profit taking would continue further as the market experienced serious technical correction last week.
He said the market has broken two important support levels, 1,560 and 1,550 after gaining 92 per cent from March 2009.
"Market consolidation has started earlier than expected by most analysts who believed the correction will happen after the Chinese New Year," he said.
This situation will last for a while, normally within two months as foreign funds would continue to reduce positions, Nazri said.
He said support level was expected at 1,530 while resistance at 1,515 and 1,500, while stocks in focus were consumer-related.
Meanwhile, MIDF Research expected the potential for an overnight policy rate (OPR) hike next week may be the catalyst for the market to break the 1,600 points level.
Banking stocks were expected to rally if the central bank raises the OPR by 25 basis points (bps), next week, it said in a research note.
"We continue to hold our view that Bank Negara will raise OPR by between 50-75 bps in 2011, with a 40 per cent possibility of a 25 bps hike in the first-half and the balance in the second-half 2011," it said.
For the week just ended, share prices on Bursa Malaysia saw bearish trade due to persistent sell off in key blue chips after the recent strong rally.
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