The Indonesia Composite Index (ICI) suffered a big correction yesterday, sparked by profit taking especially in property, plantation, banking, mining and energy sectors. The 44-point correction (-1.9%) brought the index down to the 2,270 level, just 30 points above our support level at 2,240. The correction made Indonesia the worst performing market in Asia yesterday as most Asian markets closed flat to higher, with the Shanghai and Shenzhen markets recording an amazing jump of 9% each. It seems that investors who have been discounting concerns of a possible fuel price hike began to realise the seriousness of the government's plan in cutting fuel subsidy when it was highly publicised in the media yesterday. Market transaction value was flat at Rp4.4b compared to yesterday's. Foreign investors booked a Rp193b net buy yesterday and contributed 25% of total market transaction value.

Following the drop in oil price and the stronger openings in Asian markets, we expect the ICI to recover some of its losses today. Oil price fell 3.2% last night to US$116/bbl from its peak of US$119.9/bbl last Wednesday, and pushing Dow Jones index to close 85.7 points (0.67%) higher. Asian indices responded well and opened higher this morning with the Nikkei 225 index 1.5% stronger, followed by Straits Times index's 0.8% gain. Although the overall sentiment is positive, we do not expect ICI to recover back the 3.4% loss its suffered so far this week. Support and resistance levels remain at 2,240 and 2,470 respectively.