The FTSE Bursa Malaysia KLCI (FBM KLCI) is likely to stage a downside correction next week on profit-taking, following the bullish performance of local stocks with a 8.3 per cent gain year-to-date.

The Vice-President/Head of Retail Research, Affin Investment Bank, Dr Nazri Khan said the FBM KLCI had broken a eight straight day winning streak on Thursday and the late day reversal on Friday, may initiate a downside momentum next week.

"The downside action comes in the wake of a number of factors, including the strong current resistance at the 1,650 level and its overbought situation. This points to more downside in the near term," he said.

On the external level, he said, hopes that the global equity may get a boost from the latest quantitative easing phase four, may have been affected by the US budget deadlock

"Investors are still awaiting signs of progress to avoid tax rises and spending cuts by January 2013," he added.

Investors initially cheered the US Federal Reserve committing to an extra US$45 billion of monthly US government bond purchases and an unexpected decision to tie its interest rate policy directly to the state of the economy.

However, with two weeks to go before the New Year, Nazri said renewed concerns over the US budget negotiations had appeared, and the equity market's overbought advance from the late-November low could now be vulnerable to a short term setback.

"We also expect some volatility next week with the global markets facing an active economic calendar, including the Bank of Japan Monetary Policy Statement, Japan's Trade Balance, the US Housing Starts and Germany Business Climate," he said.

For the week just-ended, the FBM KLCI rose 34.21 points to 1,651.98 from 1,617.77 previously.

The Finance Index improved 86.58 points to 15,126.77 and the Industrial Index garnered 19.8 points to 2,706.6, while the Plantation Index jumped 147.17 points to 7,985.46.

The FBM Emas Index chalked up 196.23 points to 11,202.13, the FBMT100 improved 200.66 points to 11,059.8, the FBM ACE Index eased 38.01 points to 4,128.23 and the FBM 70 Index rose 84.75 points to 12,093.08.

Weekly turnover increased to 4.31 billion shares valued at RM7.6 billion from the 4.199 billion shares valued at RM6.171 billion last Friday.

The Main Market volume improved to 3.48 billion shares worth RM7.47 billion from the 3.268 billion shares worth RM6.052 billion previously.

The ACE market volume dipped to 624.28 million shares worth RM106.93 million from 723.287 million shares worth RM105.34 million last Friday

Warrants declined to 187.12 million worth RM18.98 million from 196.06 million units valued at RM11.021 million last week. -- BERNAMA