* FTSE 100 down 0.1 pct, off 4-1/2 year highs
* FTSE 100 in technically "overbought" territory on RSI
* Capita falls after Canaccord Genuity downgrade
By Sudip Kar-Gupta
LONDON, Jan 28 Britain's benchmark share index
slipped back on Monday from its highest level in four-and-a-half
years, with some technical indicators suggesting that a recent
rally would fade away in the near term.
The blue-chip FTSE 100 index was down by 0.1
percent, or 4.68 points lower, at 6,279.77 points by 0905 GMT,
having gained 0.3 percent on Friday in a move that had pushed
the index up to its highest level since mid-2008.
However, the FTSE 100 is now at a level where it was in
"overbought" territory, according to technical analysts, which
some traders may use as a sign to sell and book profits on
equities in the near term.
The FTSE 100's relative strength indicator (RSI) is
currently at 79.5 points - above the 70 point level which shows
that an index is in technically "overbought" territory.
The FTSE 100 has also risen by some 6.5 percent since the
start of 2013, meaning the index has already risen by more in
January than it did for the whole of 2012, when it rose 5.9
"We're getting to the point where you'll get profit-taking.
I wouldn't be buying at these levels," said EGR Broking managing
director Steven Mayne.
Asset returns in 2013: link.reuters.com/dub25t
British outsourcing company Capita was the
worst-performing FTSE 100 stock, falling by 2.6 percent after
Canaccord Genuity cut its rating on the group to "sell" from
In a research note, Canaccord Genuity said it expected that
Britain's coalition government may look elsewhere other than
Capita when handing out its next batch of contracts, which could
impact the company.
"Capita is a well-managed business that still achieves high
returns on operating assets. But the attractions of its
investment case have diminished," wrote Canaccord Genuity.
Ashish Misra, head of investments at Lloyds TSB Private
Banking, said that although he was upbeat on the prospects for
equities globally, he was "underweight" on UK shares.
Misra had an "overweight" stance on Asian and global
emerging market equities, partly due to valuation grounds and
earnings growth prospects.
"Valuations are not as enticing as last summer with markets
up by almost a quarter from June 2012 lows," said Misra.
According to Thomson Reuters Starmine data, the "smart
estimate" on the UK stock market gives a price to
earnings-per-share ratio of 12 times for the next 12 months.
This is slightly less than a comparative ratio of 12.9 for
the Thomson Reuters Asia Pacific Index.
However, those Asian equities are forecast to have earnings
growth of 23.3 percent over the next 12 months, according to the
Starmine "smart estimate", whereas earnings are seen growing at
a slower pace of 7.2 percent on the UK stock market.
(Reporting by Sudip Kar-Gupta; Editing by Toby Chopra)