#Market Outlook* KLCI seen lower on plantation stocks

KUALA LUMPUR (Jan 18): Plantation stocks are expected to be the crucial highlight of the FBM KLCI on Friday. This is in anticipation that India's move to slap import taxes on crude palm oil (CPO) will hurt industry players'earnings and share prices.

A fund manager said the FBM KLCI may decline mainly on plantation stocks which constitute a major portion of the benchmark.

"The KLCI may see a slight decline," he told theedgemalaysia.com over telephone on Friday morning.

The FBM KLCI fell 1.86 points or 0.11 % to close at 1,681.09 a day earlier

According to news reports quoting India's Agriculture Ministry, the world's  second-largest consumer of cooking oil, will impose a 2.5% import duty on CPO and soybean oil while the rate for refined cooking oils stays at 7.5%.

The fund manager said the move may have "negative repercussions" on CPO prices as it essentially reduces global demand for the commodity and increases stock levels in major producing nations Indonesia and Malaysia.

Meanwhile, Alliance Research Sdn Bhd technical analyst analyst Teoh Chang Yeow said daily trading dynamics of the FBM KLCI on Thursday suggest that sellers had an upper hand in dictating the direction of the benchmark.

In a note, Teoh said buyers were seen reluctant to play a bigger role in the absence of bullish dynamics.

"The FBM KLCI would thus be likely to trade below 1,679.02 on Jan 18, 2013," Teoh said.

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