Showing a short-term bullish trend, the Abu Dhabi Securities Exchange (ADX) advanced for the fifth session yesterday and added 39.91 points, or 1.74 per cent, to close at 2338.56 points.
Telecommunications and energy sectors were the main players in the upward trend in the ADX, which was the only GCC market advancing yesterday.
The main support for the index came from etisalat, which rallied 7.28 per cent to close at Dh10.80.
Etisalat rallied after the company announced cash and share dividends. Taqa also added 8.87 per cent to close at Dh1.36. The company also started to buy back its shares.
The turnover remained at low levels with 133.4 million shares changing hands at a total value of Dh236.8 million.
Real estate and energy sectors continued to lead active lists by both volume and value. Aldar and Sorouh represented 35 per cent of the total trade volume and both stocks retreated during the session.
However, etisalat turned active yesterday and advanced sharply to undermine the negative impact of the real estate sector.
The ADX was giving indications of steady bullishness and broke its resistance at 2300 points, opening the way for its next resistance at 2400-2500 points.
However, the market is projected to face some profit booking pressures after it rallied for several sessions.
Ziad Dabbas, Financial Consultant at National Bank of Abu Dhabi, said weakness remained in the ADX and this was clear in the low daily turnover during the past two months.
"There are some institutional investments in ADX, but this new liquidity did not introduce strong support to the market until now. The UAE markets in general still need very strong liquidity to change their general trend and create a new upward trend," he said.
Shiv Prakash, equity investment analyst at Mac Capital Advisors, expected that the ADX was heading towards the next resistance levels of 2500 in the short term after it crossed 2275 levels.
"Intraday market can be bullish if trades above the pivot levels of 2334 and can see the resistance of 2371-2404 points. Bearishness can come if shares are traded below the pivot to see the lower support of 2301 points," he added.
Al Mal Capital maintained its rating of etisalat's stock as "outperforming" with a target price of Dh19.15, giving a 74 per cent upside to the current price.
Etisalat announced a proposed 35 fils per share cash dividend and one bonus share for every 10 held by equity holders.
"The cash dividend is 3.5 per cent higher than our estimate of 58 fils. This brings the full year 2008 cash dividend to 60 fils, an increase of 20 per cent over the full year dividend of 50 fils for 2007, and generating a cash dividend yield of 5.5 per cent for 2008," Al Mal Capital said in a research note.
It added that the high cash dividend yield reinforced the defensive nature of the telecom sector and its ability to generate stable cash flow despite the current economic downturn.