Analyst: Profit-taking after rebound prompts JCI correction
Some investors are choosing to realise profits or wait for a clearer opportunity before accumulating shares again.
Jakarta (ANTARA) – Capital market analyst Elandry Pratama said investors’ profit-taking was one factor behind the Jakarta Composite Index’s (JCI) decline in Wednesday trading, after it rebounded on Tuesday (20 October).
The JCI closed down 44.53 points, or 0.84 per cent, at 5,234.36 in the first trading session on Wednesday, after rebounding by 282.28 points, or 5.65 per cent, to 5,278.89 at Tuesday’s close.
“Some investors took advantage of the rise to realise profits. At the same time, sentiment surrounding MSCI and concerns about foreign fund flows continue to weigh on the market, making investors more cautious,” Elandry told ANTARA in Jakarta on Wednesday.
Elandry said global and domestic investors were currently being more selective and managing their risk appetite.
After a period of high volatility, he added, market participants were still waiting for certainty over reforms to transparency in Indonesia’s capital market, as well as for foreign investors’ response to those developments.
“In these circumstances, some investors choose to realise profits or wait for a clearer opportunity before accumulating shares again,” Elandry said.
He added that pressure on the JCI should be assessed by looking at the performance of large-cap shares, particularly in the banking sector, which carries significant weight in the index.
The energy and commodities sectors, as well as shares that had previously risen sharply, should also be watched because they may face profit-taking.
“The contribution of each sector to the decline will depend on share price movements in today’s trading,” Elandry said.
In the short to medium term, Elandry expects the JCI to remain volatile. He said the previous day’s gains were not enough to confirm that the market had entered a reversal phase, as further corrections and selling pressure remained possible.
He said 5,405 was an important level to watch as an early confirmation of a trend change. Until the index can break through and hold above that level, gains should be regarded as a technical rebound.
“Investors should remain selective, avoid chasing prices during a rebound, and follow a clear trading plan with defined profit targets and measured risk limits,” Elandry said.
At the close of the first trading session on Wednesday (21 October), the JCI was down 44.53 points, or 0.84 per cent, at 5,234.36. The LQ45 index of 45 leading shares fell 3.47 points, or 0.65 per cent, to 526.88.
Share trading saw 1.07 million transactions involving 16.93 billion shares worth Rp9.43 trillion. A total of 218 shares rose, 499 fell and 246 were unchanged.
According to the IDX-IC sectoral indices, three sectors gained. Non-primary consumer goods led with a rise of 0.38 per cent, followed by healthcare, up 0.36 per cent, and primary consumer goods, up 0.02 per cent.
Eight sectors declined. Industrials fell the most, by 2.65 per cent, followed by technology, down 2.06 per cent, and basic materials, down 1.60 per cent.