DFM recovers early losses, index closes flat

Most stocks on the Dubai Financial Market recovered from early losses yesterday during the first session of the week – but they moved in a narrow range on thin volumes in the absence of any major buying trigger.

Investors seemed to have priced in the impact of uncertainty over Dubai World's restructuring plan but the clouds of doubt still cast a shadow over market sentiment.

The general index, led by market bellwether Emaar, added 10.97 points, or 0.69 per cent, to close at 1,592.91. Realty, finance and investment, insurance and transport stocks closed higher while banks, telecom and utilities shares ended in the red. Emaar, Arabtec, DFM and Air Arabia did most to push the index upwards.

Hussam Al Husseini, Head of Brokerage at Emaar Financial Services, told Emirates Business: "We saw active stocks, regardless of their size, move upwards though in a limited way.

"Heavyweights such as Emaar, Arabtec and DFM pushed the index up, while small stocks like Union Properties and DIC kept up the momentum. However, I see a lot of liquidation activity taking place among the speculative trading."

Union Properties was the subject of insider trading yesterday as sell orders for 800,000 shares were recorded at Dh0.46 per share. The stock closed flat at Dh0.47 after recording Dh2.6m of trading and volume of 5.82 million shares.

Mirroring the overall positive movement on the bourse, 14 stocks advanced, eight declined and six closed flat. The top five gainers all closed with increases of less than five per cent. The top five were Dar Takaful, which gained 4.48 per cent to close at Dh1.40, Ajman Bank, up 3.66 per cent at Dh0.85, Emaar, up 3.47 per cent at Dh2.98, Salama, up 2.56 per cent at Dh0.80, and Air Arabia, up 2.08 per cent at Dh0.98.

In light of the present market conditions, which indicate directionless trading, investors are preferring dividend yields to capital gains. The market opened at 1,583.22 points and slipped to 1,566.61, which remained the session's low, in the first half-hour as declines by Emaar, DFM and six other stocks weighed on the index. DSI and Gulf Navigation were trading flat.

The index made a U-turn at 11.15am and touched 1,580. Arabtec, DIB, Shuaa Capital, Salama were trading higher, while Emaar turned flat. The index started recovering from 11.15am onwards as Emaar, Arabtec Air Arabia and DIB propelled the index upwards.

Shiv Prakash, a senior technical analyst at MAC Capital, said: "The index opened down, forming a low of 1,566, then later recovered as anticipated on selective buying. Intraday, if the market remains above 1,573 we could see 1,601-1,610 resistance levels. Below the pivot, support would come at 1,575."

Takaful-Emarat announced that its board meeting would be held on March 3.

All eyes on critical 1,600 mark

The DFM has moved upwards in a narrow range for the past two sessions but is trading below the key 1,600 key level.

Market players are optimistic that a break above this level will keep the market in positive terrain, but otherwise it may slip further.

"We can't judge the market direction on this momentum," said Hussam Al Husseini, Emaar Financial Services. "We have to see whether the market breaks through the critical 1,600-mark."

The DFM witnessed trading turnover of Dh230.51 million and volume of 142.96 million shares yesterday across 2,986 deals involving 28 stocks. Emaar, Arabtec, DFM and Air Arabia accounted for 78 per cent of total trading.

Shiv Prakash, MAC Capital, said: "If the market holds above the support level of 1,540 we can expect an intermediate-term reversal of an existing bearish trend until the resistance levels of 1,622 are reached in the coming sessions. This may attract further buying in Emaar and Arabtec."

Arabtec in limelight

Arabtec witnessed encouraging buying support throughout the session as the stock gained 1.4 per cent to close at Dh2.17.

The construction major told the exchange that the due diligence date for the $1.7 billion (Dh6.23bn) stake sale to Aabar Investments had been extended to April 16. "Arabtec moved more than Aabar," said Hussam Al Husseini. "I don't think this movement was because of the latest disclosures. The stock moved up owing to key factors such as its fundamentals and other things. It was supposed to finish a month ago so there is nothing new on this front to influence trading."

The initial contract dated January 9, 2010, the subscription agreement and the term sheet gave both parties the right to extend the due diligence date.

Because of the enormity of the task and the limited timeframe, both sides agreed to amend the subscription agreement and the term sheet to extend the due diligence date to midnight on April 16, 2010, said Ziad Makhzoumi, Chief Financial Officer, in a statement to the exchange.

Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here.

Follow Emirates 24|7 on Google News.