Malaysian shares are expected to continue to be in the correction mode, especially with investors seeking a safe haven in the US dollar following weak European equities.
An analyst said the market had been drifting to form its base and would likely carry on the trend and trade around the current range.
For the week just ended, the benchmark FBM Kuala Lumpur Composite Index shed 41.29 points to 1,259.16 from last week's 1,300.45.
"There appears to be a flight to safe haven because the European market is becoming uncertain and this may affect the market. I see the dollar strengthening more," the analyst said.
He said that with 1,248 being a strong support level, the market just drifted on Friday to form a base. "It will continue to drift in the coming weeks, but prices will not crash," he added. He put the lower resistance at 1,255.
This week, in line with regional bourses, the local market saw a down trend with heavyweights, especially banking counters, taking a beating.
This was due to China's monetary policy tightening coupled with the proposal by the Obama administration to limit risk-taking by banks in the United States.
Locally, Bank Negara Malaysia kept the overnight policy rate at two per cent but hints of a possible review to avoid financial imbalances, had affected the banking stocks heavily.
There is speculation that interest rates will increase in the second quarter, causing costs to go up and affecting borrowing.
This week, the Finance Index dipped 336.7 points to 11,078.79 from 11,415.49, the Plantation Index fell 251.59 points to 6,188.13 from 6,439.72 and the Industrial Index was 114.86 points lower at 2,586.04 from 2,700.9.
The FBM Emas Index dropped 266.0 points to 8,484.0, the FBM Top 100 Index decreased 261.54 points to 8,249.32 and FBM ACE Index declined 113.38 points to 4,381.83.
Total turnover slipped to 5.23 billion shares worth RM7.66 billion from 5.927 billion shares worth RM7.437 billion a week earlier.
Volume on the main market dropped to 4.14 billion units valued at RM7.5 billion from last week''s 4.838 billion units valued at RM7.188 billion.
Call warrants went down to 193.12 million units worth RM37.04 million from 284.809 million units worth RM55.089 million.
The ACE Market volume fell to 558.8 million units valued at RM93.18 million from 748.839 million units valued at RM165.66 million. – BERNAMA
Note: Still a bad news.