With China slipping into the deflationary mode last month, the FBM KLCI was pressured lower before quick bargain hunting activities, which cushioned the downside move yesterday. As we approach the Malaysia state elections over the weekend, we expect trading activities to remain cautious. The lower liners may also set for a rangebound trading with the on-going corporate reporting season. Given that the US inflation has moderated, we reckon that Wall Street may head higher over the near term. Going forward, investors will be monitoring the outcome of Malaysia state elections as well as the US producer price index data to be released tonight.