It appears that food prices remain to be a problem in Indonesia and which cannot seem to be resolved yet. The market is paying careful attention because the inflation rate is calculated by using two food prices that are not included in the list of nine basic commodities, namely onions and peppers.

Apart from inflation, Indonesia's trade balance in July 2013 still posted a deficit of USD $2.31 billion. From January to July, the deficit has now reached USD $5.65 billion, the highest trade deficit in the history of Indonesia. Actually, Indonesia has a surplus of USD $1.9 billion in the non oil & gas sector. However, the deficit in the country's oil and gas sector is very high at USD $7.6 billion.

The International Monetary Fund (IMF) also came with a release last week that implied no positive message for the Indonesian economy. According to the institution, Indonesia's GDP growth will ease to 5.25 percent in 2013. Lastly, on the positive side, Indonesia's central bank (Bank Indonesia) announced late last week that the country's foreign exchange reserves had grown slightly by USD $400 million to USD $93 billion.

Indonesia's Foreign Exchange Reserves in 2013:

Month     Billion USD
January         108.8
February         105.2
March         104.8
April         107.2
May         105.1
June          98.1
July          92.6
August          93.0

Source: Bank Indonesia

In my opinion, the rise in foreign exchange reserves brings a positive message amid market conditions that are still not conducive for investments. The outcome of the G20 meeting showed that the US persists with its plan to attack Syria and limitation to the quantitative easing program, (which is projected to worsen the global economy). However, the BRIC nations (Brazil, Russia, India, China and South Africa) have agreed to establish a joint fund worth of USD $100 billion to be used to avert shocks in the financial markets. This fund may also prove to be a very positive message that can support global stock markets in the weeks ahead.

Meanwhile, Indonesia's domestic market still does not seem to appreciate steps that have been taken by the government. Some positive market sentiments originated from the share buyback plan that followed after Indonesia's Financial Services Authority (OJK) announced that - amid current turmoil - companies would not need shareholders' approval before conducting a share buyback. Several state-owned companies with big market capitalization have announced to buyback stocks. However, I believe that these share buybacks are only done selectively and will only prevent stocks from falling too drastically.

This week, I expect the IHSG to experience a small rebound. Despite the current bearish trend on Indonesia's market, technical indicators - including the MACD which indicates a possible golden cross - support this assumption.

David Sutyanto is a research analyst at Jakarta-based First Asia Capital