Morning Dew - 10 January 2014

BI Kept Rates Unchanged

JCI was flat at the end of Thursday trading session. The market seemed to be waiting on the BI’s rate decision to be delivered just after the market closes as well as the clarity of the raw mineral ore ban which is set to be implemented on January 12th. Differing statements coming from the government officials suggests that the mining issue remains under discussion at the moment. 

After the market closed, BI announced that the benchmark rate was kept unchanged at 7.5% while the overnight lending facility and deposit facility rate (FASBI) were maintained at 7.5% and 5.75%, respectively.

IDR stays weak at 12,263 per US$.

Robust Retail

Indonesia retail sales accelerated to 14% in November 2013 compared to the same period a year earlier. It was the fastest pace since  July 2013. The sales were 1.5% higher than October 2013.

US economy is expected to add 197k nonfarm payrolls in December, less than 203k added in prior month. Unemployment rate however, is seen stuck at 7%. Both employment data are set for release on Friday night.

Technically Speaking...

Consolidation continues as the index is back into the middle of its prior consolidation range between 4,100-4,300. 

Near-term support is at 4,154, with near-term resistance is seen at 4,212.

JCI needs to take on 4,300 convincingly to set up a stronger rally while defending its support area around 4,100.  Slipping below 4,100 may risk another visit towards 4,000 en route to 3,837.  On the upside, another push above 4,300 could revive the index’s chance to return to 4,400.

PGAS is added to the reco list. The stock has formed a bullish divergence on its RSI curve and this points at a potential rise to as high as 4,600. Considering attractive risk-to-reward ratio, we favor entry at 4,270-4,290.

Day Ahead

JCI is seen consolidating further within the confines of 4,100-4,300 trading range on Friday. With the miners remain vulnerable over the uncertainties of mineral ore export ban, upside is seen limited. IDR is also a negative for the index as the weaker it gets, the higher the odds for another rate hike to stabilize the currency.

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