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RHB Research expects the daily turnover to swell significantly upon the removal of 1,300 resistance level, as sentiment would turn even more bullish
THE stock market's key benchmark index touched the 1,300-point level briefly yesterday on strong volumes, raising analysts' expectations that the market may turn more bullish.
The last time the index closed above that level was in mid-May, 2008.
RHB Research, in a note to clients early yesterday, said it was optimistic that this would happen again in the near term.
"We expect the daily turnover to swell significantly upon the removal of 1,300, as sentiment would turn even more bullish with more aggressive buying to push the index towards the 1,390 resistance level," its technical analyst said.
The FTSE Bursa Malaysia Kuala Lumpur Composite Index hit an intra-day high of 1,300.89 points in the morning, but closed lower at 1,298.58. This was some 3.9 points higher than the previous day.
About 1.7 billion shares changed hands, which is almost twice more than the three-month daily average volumes.
RHB believes that in the near term, there will continue to be "healthy" rotational play on lower liner stocks, which have been active recently.
Semiconductor stocks have also been hogging the spotlight, with Unisem Bhd and Malaysian Pacific Industries Bhd (MPI) particularly in focus.
Both chipmakers have been on a solid winning streak since late last year, but analysts continue to like them, saying the sector is riding high on expectations of stronger earnings growth ahead.
Sentiment toward the sector improved after the world's biggest chipmaker Intel predicted a higher first quarter revenue than analysts had forecast, citing a rebound in demand for notebook computers.
CIMB Research upgraded the sector to an "overweight" this week, while RHB yesterday maintained a similar call.
"We believe the semiconductor sector is poised for a stronger recovery in 2010 given stronger outlook for key product segments (such as personal computers, mobile phones and LCD panels) as these will drive chip demand going forward," RHB said.
Its top pick in the sector is Unisem with a fair value of RM2.86. The stock has gained 52 per cent over the last 11 trading days to close at RM2.49 yesterday, its highest in about 6 years. This was 6 per cent higher than the previous day.
CIMB, meanwhile, upgraded both Unisem and MPI to an "outperform" from "trading buy" previously, but did not change their earnings forecast. Unisem's target price was raised to RM2.70 from RM2.29.
MPI was the stock market's biggest gainer yesterday, moving up 7 per cent to RM7.50, its highest close in about a year and a half.
