ADX rebounds but limited trading keeps hopes dim

The Abu Dhabi Securities Exchange (ADX) met the expectations of analysts and rebounded upward yesterday, gaining 56.42 points, or 1.29 per cent, to finally close at 4,416.08 points.

The turnover continued at low levels as 82.7 million shares were traded for a total value of Dh416.2 million. Aldar, Sorouh and First Gulf continued to dominate the most-active list, indicating that the current rebound will be short term.

Analysts believe the ADX's rebound was delayed because the decline in the market was slower than the one on the Dubai Financial Market and accordingly took a little longer to make a comeback.

However, they expect that the current rebound of the capital's market will be limited because it is facing strong resistance at 4,500 points.

Shiv Prakash, equity investment analyst at MAC Capital, said ADX, which took the exact support of 4,300, formed a hammer on the daily chart and continued the upward rally, giving a bullish close at 4,416.

"The market has formed a double bottom as well, and it looks bullish for the short term from now. Any breakdown on 4,300 points will be very bearish for the market and these support levels can be used as the stop loss for the fresh long positions if these are created."

Kefah Al Maharmah, general manager of Aldar Securities and Bonds, stressed the market was still on the downturn trend.

"The market achieved some gains at the beginning of trading then lost most of its gains by midday and rebounded again and closed in the green. These fluctuations in the index came at low turnover and a few stocks continued to dominate movements. The market still needs strong liquidity and increasing turnover. The next two sessions will be critical to assess any reversal in the index," he added.