28/12/2015 06:11 AST
The UAE’s equity markets continued to trade sideways on Sunday as profit-taking activity continued amid attractive valuations, with investors consolidating their portfolios and attempting to buoy the index before the end of 2015.
The Dubai Financial Market (DFM) index climbed to its highest level in three weeks, reaching 3,188 less than an hour after trade began. The index fell gradually throughout the rest of the day, however, to end at 3,160.92 — a 0.75 per cent increase.
The rise on Sunday extends two weeks of gains, which started on December 14, during which the DFM index rose around 8.6 per cent.
The 8.6 per cent jump, however, is still outweighed by the 10.5 per cent plunge that was seen in the first week of December alone following a chaotic Opec (Organisation of Petroleum Exporting Countries) meeting that ended with no production cuts.
Analyst Osama Al Ashry said that the gains over the past two weeks were merely corrections, and expected the DFM index to reach new lows.
“Today (Sunday) we saw the DFM index reach its resistance level of 3,180, but it clearly couldn’t rise beyond that, so we saw a drop afterwards. I think these corrections could take the index to 3,180 or even 3,290 but I expect it to drop again especially since the index is closing this year at its lowest levels,” he said.
Al Ashry, a member of UK organisation, Society of Technical Analysts, said that he expected Brent crude oil prices to drop, which would drag down the UAE’s equities.
He expected the DFM index to reach 2,570 in the first quarter of 2016.
“We saw stronger trade values on DFM today but the index only rose 0.75 per cent, which means that the overall buying activity wasn’t too strong. The index has a resistance level at 3,444, so if it manages to reach that level, the market would pass the risky areas, but I doubt that will happen,” the analyst said.
On DFM, Arabtec continued to top the market in terms of trade values, accounting for 35 per cent of the total market value. Its share prices rose just 2.42 per cent to reach Dh1.27, signalling a lot of transactions on the share but relatively little buying activity at the end of the day.
Gulf Finance House also rose 3.85 per cent, Dubai Islamic Bank gained 1.33 per cent, and Emaar ended 1.05 per cent higher. Amlak ended flat while Drake and Skull International fell 0.47 per cent.
In an emailed note from Al Ramz Capital, Talal Touqan, the company’s head of research and advisory, said, “Slightly better sentiments along with some speculative moves on highly liquid names helped most UAE stocks record further gains last week.
We expect quiet activity this week as the year-end approaches, while a technical consolidation for DFMGI around current levels would probably pave the way for another upward move beginning next week as investors may start repositioning their holdings towards income stocks.”
Meanwhile, the Abu Dhabi Securities Exchange (ADX) general index rose 0.11 per cent to reach 4,246.52 amid particularly weak trade values of Dh74.4 million.
“The ADX index will remain in risky areas unless it reaches 4,525. Otherwise, its first support level is at 3,787. Whether it bounces back after reaching this support is unclear,” Technical Analyst Al Ashry said.
On ADX, Commercial Bank International topped the gainers’ list with a 15 per cent jump — the daily cap for an increase in share prices.
It was followed by Ras Al Khaimah Poultry and Feeding Co. with 14.29 per cent, Abu Dhabi National Energy Company (Taqa) with 9.1 per cent, Abu Dhabi Islamic Bank with 3.45 per cent, and National Bank of Ras Al Khaimah with 3.39 per cent.
Of the 34 stocks traded on DFM, 22 went up, eight went down, and four remained unchanged. Of the 28 stocks traded on ADX, 11 advanced, 10 declined, and seven remained flat.
Gulfnews
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