ADX bullish after breaking 2,400 resistance level

23/03/2009 00:00 AST

The Abu Dhabi Securities Exchange (ADX) continued its bounce for the fourth session running yesterday, adding 16.23 points, or 0.68 per cent, to close at 2,411.76 points.

The index broke through its resistance level of 2,400 points and looked bullish for the short term. The ADX has continued to lead GCC stock markets so far this year as it was up by 0.91 per cent year to date.

However, turnover remained low as 43 million shares changed hands with a trade value of Dh75.4 million.

Construction and real estate stocks were among the most active gainers with Arkan adding 9.86 per cent to close at Dh4.57. The banking sector also advanced with FGB adding 8.55 per cent to reach Dh8.05.

The energy sector attracted strong buying with Dana the most active stock by volume. Taqa also attracted strong trading but lost 1.17 per cent with last trading at Dh1.70.

"The ADX is expected to continue its upward trend in the short term as it is trying to consolidate and the outlook is stable," said Hesham Bakry, Institutional Sales Manager at Al Futtaim HC. "There is accumulation of selected stocks in the real estate and banking sectors. Also, energy stocks, especially Dana, are attracting more interest among investors. Foreign investors were net buyers in the market last week and we expect this trend to continue during the next few weeks."

However, Bakry stressed that the accumulation process was focusing on selected companies, which could be seen from the concentration of the trade volume on a few stocks. "We are approaching a stage of active trading on the ADX as listed companies have started to distribute cash dividends and bonus shares that will attract buying on selected stocks."

UNB attracts buying
Union National Bank attracted strong buying yesterday and rallied to its resistance level near Dh2.50. However, the stock closed lower and was last traded at Dh2.38.

The interest in the stock came after the bank announced plans to convert its entire Dh3.2 billion Ministry of Finance liquidity support loan into a Tier 2 capital loan. The decision was approved at Saturdays general assembly meeting, which also approved the distribution of 10 per cent cash dividend worth Dh187.5 million and 10 per cent bonus shares.

Taqa faces selling pressure
Taqa lost 1.17 per cent and was last traded at Dh1.70 after the stock faced selling pressure at the beginning of the session.

The stock attracted strong buying at lower levels at the end of the session after the company announced it had completed the acquisition of a 50 per cent stake in Marubeni Corps Caribbean power portfolio for $320 million (Dh1.17 billion). "The portfolio consists of equity stakes in power generation and transmission facilities," said a Taqa spokesman.
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