How did bargain hunting in blue chips lift the benchmark?

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Bargain Hunting in Blue-Chip Stocks Contributed to Benchmark Index Gains

Bargain hunting in select blue-chip counters provided a boost to the benchmark index, helping it recover from oversold levels. This activity, driven by attractive valuations despite ongoing foreign fund outflows, indicates selective buying interest emerging in the market. The phenomenon of bargain hunting typically occurs when stock prices have fallen significantly, presenting an opportunity for investors to acquire shares at a lower cost, anticipating a future price rebound.
Understanding Blue-Chip Counters

Blue-chip counters refer to the stocks of large, well-established, and financially sound companies with a long history of reliable performance. These companies are often leaders in their respective industries and are generally considered less volatile than smaller companies. Their inclusion in major indices like the FTSE Bursa Malaysia KLCI signifies their substantial market capitalization and influence on the overall market's direction. For instance, heavyweight banking counters such as Maybank, which rose eight sen to RM10.74, and Public Bank, improving nine sen to RM4.84, are examples of such blue-chip stocks that saw activity.
The Concept of Oversold Levels

"Oversold levels" is a technical analysis term used to describe a situation where a stock or an index has experienced a significant decline in price over a short period, suggesting that its price has fallen too far, too fast. This condition often implies that the selling pressure may be exhausted and a rebound is likely. When the FBM KLCI reached these oversold levels, it created an environment where investors saw an opportunity to step in and buy shares at discounted prices, thereby pushing the index upwards.
Impact of Bargain Hunting

The act of bargain hunting involves investors strategically purchasing stocks that have seen a substantial price drop, believing they are undervalued. This increased buying activity, particularly in significant blue-chip stocks, directly counteracts the selling pressure that may have contributed to the oversold condition. By absorbing available shares at lower prices, bargain hunters help to stabilize and eventually drive up the index. Rakuten Trade Sdn Bhd vice-president of equity research, Thong Pak Leng, noted that this activity was instrumental in lifting the benchmark index from its oversold position.

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How did bargain hunting in blue chips lift the benchmark?

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