Jakarta, CNBC Indonesia – The Composite Stock Price Index (IHSG) ended down 0.22% to 4,047.42 in the first trading session, Thursday (17/9/2020), even though at the start of trading it had strengthened 0.81%. Trade data recorded that foreign investors made net selling of Rp. 219.4 billion on the regular market today from the total daily transaction value of Rp. 3.2 trillion.
Early today, the US central bank (The Fed) announced monetary policy, but unfortunately it has not been able to lift sentiment in the stock market.
The same thing might happen in the second trading session when Bank Indonesia (BI) announces monetary policy.
Even though the data are voices wanting BI to cut interest rates again, it is unlikely that BI will do this. The consensus compiled by CNBC Indonesia estimates that BI will keep its benchmark interest rate at 4%
BI views that the way to recover the economy is through the quantitative easing route (quantitative easing/ QE).
This was expressed directly by the Governor of BI Perry Warjiyo. With QE, BI injects liquidity into the market by decreasing the minimum reserve requirement (GWM) and monetary expansion. As of August 14, BI has provided QE of IDR 651.54 trillion.
Technically, even though it weakened, JCI was still holding above support at 5.040.
Meanwhile looking at the 1 hour chart the stochastic indicator is entering the territory oversold, thus giving the opportunity rebound.
Graph: IHSG 1 Hour
Stochastic is leading indicator, or indicators that initiate price movements. When Stochastic reaches the territory overbought (above 80) or oversold (below 20), then the price of an instrument has the opportunity to reverse direction.
But when the fundamentals are not supportive, the stochastic can be stuck in the oversold area for a long time.
As long as it remains above support, JCI has the opportunity to strengthen to the nearest resistance at 5.090, if it is successfully passed JCI has the opportunity to strengthen back towards 5,130.
Meanwhile, if the support at 5,040 is successfully passed the JCI has the risk of falling towards the psychological level of 5,000. JCI selling will increase if the psychological level is broken.
CNBC INDONESIA RESEARCH TEAM
(pap / pap)