UAE stocks managed to maintain their support levels yesterday despite the profit-booking movements that were anticipated after they rallied for two sessions running.
The Dubai Financial Market ended its bounce and closed almost flat at 1,662.45 points, down by 3.35 points or 0.2 per cent. Turnover declined dramatically as 193.4 million shares with a total value of Dh304.2 million changed hands – one of the lowest levels seen this year.
Despite facing selling pressure from the start of the session leading stocks moved in a narrow range and held above their support levels. This helped the general index to maintain its gains from earlier in the week. However, there continued to be high volatility in the market and the index faced sharp fluctuations throughout the session.
Active stocks in the real estate sector, especially Arabtec and Emaar, created the highest pressure on the index after their strong bounce during the previous sessions. Arabtec was the leading active stock, attracting about 45 per cent of turnover. The stock fluctuated in a narrow range between Dh2.58 and Dh2.62 before closing at Dh2.60. Emaar fluctuated between Dh2.60 and Dh2.65 and ended the session at the lower level.
Aramex was the biggest active loser as it fell by 4.91 per cent to close at Dh1.16. There was selling of the stock after the companys extraordinary general assembly approved changes in its ownership, allowing investors from outside the GCC to own up to 49 per cent of its shares.
"GCC nationals may, along with UAE nationals, comprise 51 per cent of the companys share capital ownership," the company said in a statement to DFM.
However, the banking sector eased the pressure on the market on very low turnover. Heavyweight Emirates NBD added 3.84 per cent to close at Dh2.97 while Commercial Bank of Dubai advanced 3.49 per cent to Dh3.26.
The current movements in the market are part of a consolidation process to create a new base before DFM can rebound and change its direction, according to analysts.
Mohammed Ali Yasin, Chief Executive of Shuaa Securities, said the current technically motivated movements were common at this time of the year.
"There is no news that could create a strong trend in the markets and we will continue in this sideways pattern during the coming few months. The markets are moving in a narrow range and this is a positive sign that they are building a new base above their support levels.
"During the recent rally DFM succeeded in breaking through an important resistance level of 1,600 points on high turnover. This level has become its new support and the next resistance will be about 1,700, and strong turnover will be needed to break through that. The market is resting after the rally and we expect some bullishness to return next week."
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