The Dubai Financial Market's rally continued for a seventh consecutive session yesterday, largely on the back of institutional buying as retail investors took profits.
The DFM general index rose by 29.15 points, or 1.49 per cent, to close at 1989.39 compared with the previous day's close of 1960.23 points.
The seven-session rally has pushed the index 14.96 per cent higher than the May 25 level of 1730.44, resulting in a net gain of 258.95 points.
"Extra buying by foreign investors has kept the market at higher levels in each session despite profit booking," Vyas Jayabhanu, Head of Al Dhafra Financial Broker, told Emirates Business.
"However, investors are still sceptical about sustainability as the market is poised for a correction, which could happen in the next session or early next week."
The utilities index led the gains with an increase of more than six per cent, followed by the investment index at 2.48 per cent, insurance at 2.09 per cent, transportation at 2.03 per cent, real estate at 1.69 per cent and telecommunications at 1.07 per cent, while the remaining indices closed with gains of less than one per cent.
The trading turnover was Dh1,383 million and the volume reached 960 million shares. There were 14,228 transactions in 28 stocks, of which 21 advanced, six declined and one remained unchanged.
Early gains saw the general index soar by more than three per cent.
It subsequently fell to 1953.74 points at 10.45am but immediately went higher to 1986.37 because of the buying support from foreign investors. The index moved in a 25-point range for the rest of the session before closing at the day's highest level.
Shiv Prakash, a technical analyst at Mac Capital, said: "The Dubai market is expected to be bullish if the general index remains above 1920, as this is the support level on the daily charts. A break below 1920 level would prove bearish and we could witness profit booking.
"That could lead the index down towards the 1880-1800 level in the coming sessions. As of now, the markets is up and it's trading well above the critical support levels with good volumes."
IAIC, Tabreed, UPP and etisalat, which had traded flat in the previous bullish sessions, achieved breakouts yesterday.
"IAIC, which was given a buy near Dh0.94 in our online trading calls service, saw a clear breakout and is expected to touch Dh1.15 in the coming sessions," said Prakash.
"The stock was 14.13 per cent up at Dh1.05 for the day."
Tabreed rose by 6.09 per cent to close at Dh0.87 while UPP gained 7.22 per cent to close at Dh0.89.
Emaar, DIB and Dubai Investments came under pressure during the first half of the session because of profit booking but later moved northwards.
"Emaar picked up late in the session and closed above its mid-session lows," added Prakash.
"The stock was up by 1.29 per cent at Dh3.92. Gulf Navigation also attracted volume and was up by 5.88 per cent at Dh0.72. Immediate resistance will come at Dh0.75 and if this is broken the stock could move to Dh1 in the short term."
2000 is index's psychological barrier
The Dubai Financial Market again failed to breach the key 2000-point level yesterday.
Profit taking in the market heavyweights has pulled the general index down whenever it has neared the 2000 points during its
seven-session rally.
A breakthrough above this level would attract more institutional and foreign funds into the market, according to analysts.
"The 2000 mark is more a psychological than a technical resistance level," said Vyas Jayabhanu, Head of Al Dhafra Financial Broker.
"In fact 2090 is the technical resistance level for the DFM general index. The market goes up on institutional buying support and sheds early gains on profit booking.
"This pattern has been repeated for the past couple of sessions. This clearly indicates the mood of retail investors – they are not willing to hold their positions as they are worried and unclear about the future direction of the market."
The pattern is preventing the index from breaching the 2000-point mark and staging a further rally towards 2150.
Sanyalaksna Manibhandu, Head of Research at Emaar Financial Services, said: "It's a reflection of concern among investors, who are chary of the market's direction."
Shiv Prakash, a technical analyst at Mac Capital, said: "Every intraday session we witness mild profit taking, which is absorbed by fresh buying at the end of the session, and this lifts the markets to higher levels. There is only one psychological hurdle, which is the 2000 mark. Investors are eagerly awaiting a clear breakout, and if happens we could see more funds flowing into the market."
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