JCI Prone to Profit Taking

TEMPO.CO, Jakarta – The Jakarta Composite Index was flat during last week's last two days of trading, moving in a tight range of 5,048 to 5,049 bps. Lack of both domestic and external sentiments caused investors to hesitate on buying and opted to wait.

Thendra Chrisnanda, analyst from BNI Securities, said investors are still waiting for government's plan to raise subsidized fuel prices to materialize. As the November enters its third week, there is still no clarity over the fuel hike policy, which sparks fears that there will be wider social unrests.

"Investors' anxiety, which had began to shift into a possibility of social upheavals, makes some of them increasingly pessimistic take buy," Thendra told Tempo last week.

He said that most investors are also worried about the short-term prospects of some stocks following the fuel price hike. With the majority of listed shares having valuations that are considered too high compared to the domestic economic fundamentals, The JCI is prone to profit taking.

"After fuel prices are raised, the P/E ratio of 19 times is highly premium, making [the index] vulnerable to profit-taking," he said.

To avoid losses, Thendra suggested investors not to buy aggressively any time soon. For those who wish to trade modestly, he suggested paying attention to the second-tier stocks.

With the tendency to remain under pressure at the beginning of this week, Thendra expects the index to move in a limited range of 5,001-5,095 bps. "Before there is a dominant sentiment, especially regarding fuel prices, it is better to wait and see," said Thendra. 

PDAT | MEGEL JEKSON