The sell-off on Bursa Malaysia continued on Tuesday morning, as another large overnight fall on Wall Street and challenging external conditions.

Positively, the market staged a strong recovery in the afternoon session, with the FBM KLCI recouping almost all its earlier sharp losses to close almost unchanged.

The FBM KLCI fell as much as 11 points on Tuesday morning, after slumping 13 points on Monday. A recovery in buying interest in the afternoon erased most of these losses, causing the benchmark index to end just 1.4 points lower at 1,233.9.

Market breadth was negative with declining stocks beating advancing ones by a 7-to-6 ratio on volume of 773 million shares.

Actively traded stocks include KNM, Talam, Genting, Axiata, PLUS and IOI Corp. Major gainers include PPB, AMMB and Top Glove. Losers include Public Bank, BAT and Tan Chong.

The local bourse’s recent weak performance is a reflection of the increasingly cloudy external economic environment and the fact that the index had earlier held relatively resilient when regional and global bourses were falling sharply. In a sense, we are playing catch-up, as most regional markets have now started to bottom out from their earlier falls.

Monday saw another triple digit decline for the Dow Jones Industrials Average index, sending it below the 10,000-point mark. Sovereign debt issues in Europe, especially in Greece and Portugal are increasing, as the repercussions of the global financial crisis shifts from consumers to banks to now sovereigns, due to the high cost of bailouts and stimulus packages.

These concerns come amid a slew of earlier issues ranging from China’s credit tightening measures, the outlook for the US economy amid high unemployment, the timing of credit tightening and proposed further regulations for US banks.

The upcoming long break for the Lunar New Year celebrations may keep many investors sidelined for the rest of the week, especially given prevailing uncertainties.