DFM faces critical week
A critical week of trading lies ahead for the Dubai Financial Market (DFM), which will determine whether it consolidates above the important support level of 4,700 points or dives below it to take a bearish turn.
By the end of last week's trading, the DFM had frittered away its gains achieved in the technical rebound after its crash on Tuesday. On the brighter side, there is increasing liquidity entering the market, which is being considered by analysts as coinciding with the end of liquefaction of holdings by foreign investors.
A reverse in liquidity direction is expected to consolidate the Dubai market this week and analysts are expecting local liquidity to compensate the selling pressures by foreign investors.
Speaking to Emirates Business, Mohamad Al Beheiri, head of trading at Amana Financial Services, said: "The market faced strong fluctuations last week, but the index was able to close over 4,700 points in the past three sessions. This is a positive signal and can create a consolidation this week. However, that depends on the market closing on an upswing during the first two sessions. This consolidation can take the market to the resistance level at 5,000-5,200 points.
"The market also needs to create sideways movements this week. Increasing local liquidity can play a major role in this trend. Foreign investors continued to be net sellers last week, as they sold shares worth Dh1.66 billion and purchased stocks worth Dh1.1bn. Institutional investors also were net sellers at Dh287m. These selling pressures can be compensated by increasing local liquidity from individual and institutional investors," he said.
"Further, Emaar's stock returned to be the leading player last week. This role is expected to continue this week. The stock is facing resistance levels at Dh9.54 and Dh9.74. If it can close over these levels, it will be able to hit Dh10 soon." At the Abu Dhabi Securities Exchange, the trend is still in the down side and the index will be facing a support level at 4,300 points.