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KLCI : Buy On Dip AMMB and RHB Capital

Bursa Malaysia shares corrected in line with regional markets, which fell steeper led by banking stocks after fraud charges by the SEC against top US investment bank Goldman Sachs fueled concern on more regulations for financial companies.  The FBM KLCI was down 6.1 points to close at 1,326.67, off the opening high of 1,329.73 and low of 1,321.25 as622 losers swarmed 134 gainers on moderate trade of 813mn shares worth RM1.21bn.

Immediate Support at 1,321, Resistance at 1,334

While sentiment should stay cautious due to increased external volatility given uncertainty over the wider ramifications of fraud charges against Goldman Sachs, the local market is somewhat cushioned as domestic banks were mostly shielded from the global credit crisis.

As for the KLCI, look for immediate support to cushion downside at 1,321, yesterday’s low matching the 30-day moving average, and 1,320, the 50% Fibonacci Retracement (FR) of the 12-day rally from 1,292 low of 22 March to the 7 April peak of 1,347. Stronger support platform is at 1,309, followed by the 1,300 psychological level. Immediate resistance is revised lower to 1,334, the 23.6%FR, then 1,344, last week’s high, and next 1,347.

Buy on Dip AMMB & RHB Capital
As overbought momentum has neutralized after recent share price weakness, investors may switch to bargain banking stocks and blue chips such as Sime Darby, Tenaga and TM on further weakness.  Banking stocks on focus are AMMB and RHB Capital which are more attractive to buy closer to their respective immediate supports at RM4.80 and RM5.80 for rebound ahead. Continue to bargain rubber glove and oil & gas related counters at cheaper levels for better leverage upon recovery.

 

source: TA securities