Morning Dew - 15 August 2014

BI Rates Steady

Bank Indonesia decided to maintain rates steady on its regular meeting on Thursday. The lending facility and deposit facility rates are maintained at 7.5% and 5.75%, respectively while BI rate stays at 7.5%.

The BI’s decision is aimed at directing the inflation towards target at 4.5% plus/minus 1% in 2014 and 4.0% plus/minus 1% in 2015.

For economic growth, BI expects the economic growth in 2014 will  tend to move towards the lower-end of BI’s forecast which is between 5.1% and 5.5%.

JCI ended down on Thursday amidst wave of profit taking, sending the index to finish 12.72 points lower or 0.25% below Wednesday’s close.

USDIDR slipped and finished Thursday’s session at 11,667 per US$ from 11,683 per US$ on Wednesday.

BRAU Downgraded

BRAU’s rating has been downgraded buy Moody’s from B2 to B1. Several factors cited for the downgrade: continued decline of prices of thermal coal has put pressure on the company’s revenues and cash flow along with increasing risk on the refinancing of senior bonds worth US$450 million which is due within less than 12 months.

Technically Speaking...

JCI broke through the 5,165 resistance but failed to hold on to its gains as the index slipped back below 5,165.

Near-term, 5,165 is still considered as resistance, although its significance has been reduced. Subsequent resistance lies at 5,251, the all-time record high.

Near-term supports are seen at 5,165, the recent key resistance turned support, 5,039 and 5,000, followed by 4,950, the former EMA-50 resistance now turned as support. 

MACD has ticked up into the positive area after a string of declines into the negative area.  RSI has flattened after recent bounce and volume also inched higher on Monday, however.

ADRO, SMRA and WSKT recos are still awaiting their entry prices to be filled. Please check the details on the table below.

Day Ahead

BI held rates steady, and no surprises from the central bank’s statements. For now, as the upper consolidation band has been broken, the upside potential seems to be in favor of putting the index on track of hitting its all-time high at 5,251. Still, Thursday’s setback is seen as corrective while upside potential remains.

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