The Flow Of Foreign Funds To JCI Potentially Continues, Check Stock Recommendations This Week

JCI (Photo: Doc Antara)

JAKARTA - The Composite Stock Price Index (JCI) at the end of last week Friday, January 19, 2023 closed at the level of 7,227, down 0.2 percent in a week. In Indo Premier Sekuritas research, the JCI is currently making a new trend with consolidation with a support range of 7,180 and resistance of 7,280.

Equity Analyst of PT Indo Premier Sekuritas (IPOT), Dimas Krisna Ramadhani said last week there were 3 sentiments that influenced the JCI movement, namely the BI interest rate, the US government budget approval for 2024 and the US Treasury Yield increase which was back above 4 percent.

Regarding the sentiment of the BI interest rate, last Wednesday BI decided to maintain the benchmark interest rate at the same level, namely, 6 percent. This is consistent with the focus of pro-stability monetary policy, namely to strengthen the stabilization of the Rupiah exchange rate and preventive and forward looking steps to ensure inflation remains under control in the target of 2.5 percent plus minus 1 percent in 2024.

The second sentiment regarding the approval of the US government's budget for 2024, on Friday the US government and DPR approved the US government's budget for 2024 which prevented a government shutdown.

"This brings the three main indexes on the compact Wall Street stock exchange to a significant increase on Friday, and makes the S&P 500 index and Dow Jones score a new high," he explained in his official statement Monday, January 22, 2024.

According to Dimas last week, there was an increase in yields in the 10 years of the US Treasury, which was at the level of 4.15 percent, so that the movement of bond yields that were negatively correlated with the stock index made quite large volatility occur in the stock market.

The increase in the yield of the US 10 years Treasury came after US economic data was strong after the release of US retail sales data for December which was at the level of 0.6 percent of the MoM, an increase of 0.3 percent compared to the previous month.

"This raises concerns for the Fed to be able to achieve the inflation target at the level of 2 percent, thus creating higher uncertainty for market players," he explained.

Dimas said there are 3 sentiments that traders must pay attention to, namely the US monthly core personal expenditure price index, data on US weekly workers and the flow of foreign funds to the JCI.

"Based on the consensus that the US Monthly Core Personal Shopping Price Index (Core PCE) will be at the level of 0.2 percent, up from the previous month which was at the level of 0.1 percent. This indicator is used by the Fed in getting an idea of inflation that occurs there and affects the interest rate decision to be made by the Fed this month," he explained.

Regarding the sentiment of US weekly labor data, on Thursday, data on US weekly workers will be released and based on the consensus that the US will record an additional 200 thousand workers, an increase from the previous week which recorded an increase in labor of 187 thousand.

"This data is also often used by the Fed in considering the policy direction of interest rates. If the workforce continues to grow, the US economic condition is in good condition. On the other hand, this triggers concerns for the Fed if they cannot achieve the 2 percent inflation target in 2024."

Meanwhile, regarding the sentiment of the flow of foreign funds to the JCI, according to Dimas, if foreigners re-record purchases into important JCI (big banks and blue chips), it will further cause optimism for market players in 2024.

Meanwhile, in the past week foreign investors recorded purchases of Rp. 537 billion in the regular market and even the nominal purchases reached Rp. 9.19 trillion in the past month.

"The increase in stock prices of blue chips such as big banks can occur along with the accumulated purchases made by foreign investors. If the flow of foreign funds will still occur for some time to come, we can expect the JCI to rise again and form its new highest level in the next few months." he said

Based on the above economic data and sentiment, PT Indo Premier Sekuritas recommends buying in 3 stocks for trading this week until January 26, 2024, namely:

1. Buy in BRIS shares (support 2,010 and resistance 2,200)

2. Buy in BBTN shares (support 1,355 and resistance 1,450)

3. Buy in ICBP shares (support 11,550 and resistance 12,550)