The Dubai bourse shrugged off an early slump on Wednesday to close in the green for the third time this week and leave analysts awaiting a new rally.
This is likely to be relatively minor, with the Dubai Financial Market General Index expected to have the legs for about a two per cent rise in the near term to challenge the 6,000 point mark.
In a mirror image of Tuesday's performance, the DFMGI fell in early trading, shedding almost 50 points, before limited buying dragged it up to close on 5,860, up 0.6 per cent and 35 points.
In truth, there was little for investors to cheer, with turnover slipping below Dh1 billion for the first time this month and only three stocks gaining more than two per cent.
"Yesterday was quite flat after Tuesday's profit taking, with major buying only in last 15 minutes of trading, but today looks good," said Ayman El Saheb, Darahem Financial Brokerage director of operations.
"Overall, there was low liquidity, but on the other hand prices were consistent, with no deterioration of the index.
"Today will be a good day and I would be surprised if there is any more profit taking because this has largely been completed."
Dubai Islamic Insurance – or Aman – was the star, rising 2.96 per cent, while Gulf Navigation was not far behind, adding 2.22 per cent. Both of these stocks fell on Tuesday as investors booked profits, but they now appear to have resumed their upward trend. Gulf Navigation this week opened its shares to foreigners, while Aman is rumoured to soon follow suit.
Emaar returned to form, climbing 1.28 per cent to Dh11.85 and will now be targeting its first close above Dh12 since March 12.
The other blue chips also advanced, with Dubai Islamic Bank adding 1.5 per cent, while du and DFM Company increased by less than one per cent.
The top three traders were all penny stocks, with Gulf Navigation, Deyaar and Air Arabia claiming 176 million of the 273 million shares changing hands on the Dubai index on Wednesday. Deyaar closed flat, but Air Arabia added 0.98 per cent.
Saheb highlighted Aramex as a stock to watch. Media reports on Wednesday suggested the company has won approval to raise Dh100 million in new capital. This is likely to take the form of a rights issue, although no further information was given. Aramex shares have fallen 4.7 per cent this year, lagging the market by 3.5 per cent. The logistics provider recently reached its foreign ownership limit of 49 per cent.
Saheb also cited Deyaar as another stock building momentum ahead of a probable resurgence this month.
Amlak Finance also improved, rising 0.2 per cent to Dh4.98, although it failed to hold above the troublesome Dh5 mark.
Analysts differ on targets
Financial analysts differ over the immediate targets for the Dubai Financial Market.
Ayman El Saheb, Darahem Financial Brokerage director of operations, believed the market was resting on a very strong resistance level at 5,850 points and will need higher volumes to convincingly overcome this.
"Foreign funds are quite quiet and haven't yet moved into the market as I expected. When they do enter we should be in a good position to break that resistance and embark on a new rally," said Saheb.
Sherif Abdul Khalek, Al Futtaim HC Securities dealing room manager saw things slightly differently.
"Retail investors are behind most of the trading in both Dubai and Abu Dhabi, with institutions choosing to watch the market and are only taking up very small positions on both the buy and sell side," he said.
Retail players are operating from an especially short-term perspective at present and are unwilling to hold stocks for more than a few days, brokers said.
"Technically, Dubai is stuck between 5,750 and 6,000 points. Funds are waiting to see whether selling pressure among small investors will force the market below this lower boundary, which would enable them to accumulate at cheaper prices," said Khalek.
"Alternatively, the market could find the legs to take on 6,000 points, at which time the institutions could join in to take the market above this mark by two or thre per cent."
Khalek believes the latter scenario is the most likely and predicts the Dubai bourse will breach 6,000 this month, if not next week, although volumes would have to increase markedly for this to happen.
"If you take out the likes of Gulf Navigation and Arkan, volumes have actually been subdued of late," said Khalek of Al Futtaim HC Securities.
He believed volumes will improve today, with Thursday typically one of the most active trading days.
This should allow the Dubai index to continue its rise, although Khalek warns any increase is likely to be less than 0.5 per cent.
"There is little pressure from the sell side and fundamentally both markets are sound, so the medium term outlook is good," he added.