The Dubai Financial Markets rally continued yesterday as the general index neared the 2,000 mark, though it later shed its initial gains as private and institutional investors offloaded their positions at higher levels.
The DFM recorded gains for the fifth consecutive session on the back of all-round buying support from retail, institutional and foreign investors.
The index reached its highest level since December 18, rising by 5.83 per cent to touch the days high of 1,990.03 points at 1.45pm. As expected, it then encountered profit booking that dragged it down to 1,919.60, limiting the days gain to 2.21 per cent, or 41.51 points, over the previous close of 1,878.
The session opened on a positive note at 1,888, which remained the days low, and the index continued its bullish run until it reached the days high, after which it fell back to 1,909.31.
"This was on the expected lines as a lot of investors are coming back to the market," said Amjad Bakir, Trading Manager at Mac Sharaf Securities.
"Volumes and prices are picking up encouragingly. Yesterday mornings rise in oil prices further boosted market sentiment. The general index is nearing the 2,000 mark and if it breaks through this level it will touch 2,150, and a further rally towards 2,500 will be possible.
"Of course there will be profit booking, but it will be limited to a one or two per cent fall in the indexs level. As anticipated, the second half of yesterdays session saw profit booking and we anticipate this will continue. The DFM may slip to 1,920 from where its likely to again pick up and advance further. If it slips below 1,920 the next support levels will be 1,850 and 1,800."
Oil prices, which touched a seven-month high of $68 per barrel, have created fresh buying interest in regional stocks. Oil prices in the global market recovered by 30 per cent in May alone.
Vyas Jayabhanu, Head of Al Dhafra Financial Broker, said: "The markets have rallied with great momentum for seven days now mainly due a large influx of foreign investors. Investors consider the prices to be very attractive. The local economy is robust in comparison to other markets. The current oil price is also a major factor boosting investor confidence."
Shiv Prakash, a technical analyst at Mac Capital, said: "The DFM general index has an important resistance level of 2,000, which is the neckline resistance on the daily chart. We can see some profit booking near these levels again and a close above it would lead us to 2,150 target levels. Lower support levels exist at 1,880 to 1,800 where again buying would be expected."
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