Equities on the Dubai Financial Market (DFM) recovered yesterday from the previous week's losses with the DFM index recovering significantly after two sessions of downslide.
Market heavyweights Emaar, DFM and Arabtec led the gains on the bourse yesterday and bolstered the index up by 3.38 per cent. Recovering from two-week low on Thursday, the DFM general index showed signs of strong upward movements throughout the session. The index added 59.74 points and closed at 1824.97 points from the previous week's close of 1765.23 points.
Most investors were seen accumulating their positions in stocks that turned attractive as they reached oversold position. Saturday's rally on the Saudi Arabian bourse also aided market sentiment on the DFM.
All sub-indices were trading higher as the exchange recorded buying activity across the board. However, there was stock-specific trading and most of the trading turnover concentrated in a few select stocks.
Wadah Al Taha, a senior financial analyst, told Emirates Business: "It was a technical rebound after two sessions of decline last week. The index fell more than five per cent last week and the drop was not supported by the volume. Today's rebound should be supported by another session of more than Dh1 billion in turnover. Otherwise, it's not viable."
The DFM witnessed a 78.23 per cent rise in turnover yesterday, from Dh354.24 million on Thursday to Dh631.37m. The UAE markets ended the previous week in the red following negative performances of the real estate and banking sectors. Investors and institutions also preferred to wait for a clearer picture about the first quarter numbers. The index opened at 1785 points and showed upward movements throughout the session.
"The DFMGI recovered smartly from lower support levels of 1740 points and closed higher near the anticipated levels of 1825. In yesterday's session, a continuous step-by-step buying was seen with the market closing up by more than three per cent. It looks to continue heading higher in the coming sessions as well. The RSI indicator on the daily charts, which was exactly on the neckline support, clearly indicated this rise," said Shiv Prakash, senior technical analyst at MAC Capital.
Another senior equity analyst, who didn't wish to be named, said: "A rebound is expected, following last week's drop. Also, equity rebounds around the world have improved the market sentiment locally. Investors have turned very positive and are expecting favourable Dubai-specific news."
Shiv Prakash added: "After the market closed above 1824 points yesterday, there is a good chance of it continuing to go higher."
After the introduction of the three-digit tick size, the DFM saw an encouraging volume on the bourse and recorded a turnover of more than Dh600m.
However, market analysts said this was not the reason for the rise in volumes.
"I don't think tick size has had a major impact on volumes. We need a few more sessions to assess the real impact of tick size and whether it is adding to the turnover. Market players were eagerly looking forward to further announcements from Dubai World, which announced package to its lenders on March 25. The lenders have been given time to study them and get back with their views," said a senior equity analyst.
Emaar, Arabtec and DFM experienced the most trading yesterday, with the trio accounting for 86.25 per cent of the DFM's total turnover of Dh631.37m. The Arabtec stock recorded a turnover of Dh131.50m and the DFM stock Dh99.13m. The trio also churned the major volume on the bourse.
Emaar in limelight
Market heavyweight, Emaar, hogged the limelight yesterday by remaining the top gainer of the session.
The stock was the major contributor to the market's turnover and the top volume churner, recording 49.72 per cent of the total turnover. Emaar's stock recorded a turnover of Dh313.93m and a volume of 79 million shares yesterday. The stock rose 6.84 per cent and closed at Dh4.060.
"News of Emaar's Indian IPO has probably given a boost to the shares of the realty major. Emaar MGF will launch a $770m (Dh2.82bn) IPO in India within 90 days and this probably boosted trading sentiment in the stock. Market players are expecting a reasonably good response to the IPO and this will have a positive impact on Emaar as a whole," said a senior equity analyst.
Considering the promising overseas business prospects, market players are upbeat on Emaar. The IPO news bolstered the stock upwards as India is one of the major markets for Emaar. The AGM of the company is scheduled for April 19.