The Dubai Financial Market (DFM) is projected to continue its consolidation in the range of 1820-1900 points in the next few sessions with declining turnover and dropping volatility, as investors wait for strong movers.
The DFM managed to close in the positive territory yesterday after fluctuating between gains and losses four times during intraday trading. However, the index moved in relatively narrow range as volatility in leading active stocks declined and gaps in prices reduced.
The DFM index ended almost flat at 1839.07 points yesterday, adding 0.12 per cent, or 2.25 points.
The market showed signals of calm trading right from the beginning of the session as profit booking pressures started to wane while accumulations in stocks was very limited. Leading active stocks, including Emaar, DFM and Air Arabia, ended the session slightly down while Arabtec and DIB closed flat after fluctuating in a narrow range during the session.
Emaar lost a quarter of a percentage point and closed at Dh4.00 after moving in the range of Dh3.97/Dh4.04 during the session.
The DFM stock also retreated by a percentage point to Dh1.97 while Air Arabia registered a similar drop to close at Dh0.93.
"There is no clear direction at the current stage and investors are waiting for a new mover after strong movements in the market since the beginning of March," said Hussam Al Jundi, General Manager of Electronic Stock Brokerage.
"The profit booking wave, which started at the beginning of April, is easing and investors are waiting for new indicators about the direction in the market. So, the volatility in intraday trading dropped. Also, speculators reduced their activities after prices of leading active stocks dropped, making them unable to achieve quick gains. We are seeing some accumulations but at very low levels. Investors are waiting for the DFM index to reach its support areas at around 1820 points to start building new positions."
Marwan Shurrab, Vice-President of Gulfmena Alternative Investments, agreed that the DFM was consolidating at the current stage after it caught up with its regional peers during the March rally.
"The DFM index saw sharp movements which attracted investors in March and advanced to catch up with other GCC bourses. The market is consolidating at its current levels and the movements are expected to be limited in the coming few sessions," Shurrab said.
"There are no strong movers in the market after it priced in positive news about the Dubai World restructuring proposals as well as the distribution of cash dividends and bonus shares. Investors are waiting for new indicators that may affect prices of listed companies in any direction."
First quarter results, he said, will be the main mover in the market in the coming weeks, and investors are waiting for estimates and announcements from listed companies before building new positions.
Emirates NBD main supporter of DFM
Heavyweight Emirates NBD was the main supporter of the DFM index yesterday after the stock rallied by almost its upward limits, adding 4.78 per cent to close at Dh3.07. The stock witnessed relatively strong buying interest.
DIB managed to close flat at Dh2.79 after fluctuating during the session amid good buying interest, while CBD remained flat without trading.
"The banking sector is attracting investors amid good expectations that banks will be able to announce positive results in Q1. Banks took strong provisions last year which can cover all their losses and these provisions may turn to profits in the coming period," said Hussam Al Jundi. "From our contacts with banks, we have noticed a trend to expand their operations and financing facilities for other sectors. Despite interest rates being high, banks' willingness to extend financing is a good indicator for the economy," he said.
DFM has announced that UAE-listed companies have shown 100 per cent compliance in disclosing their annual results within the deadline of three months from the end of the financial year.
"By the end of March 2010 the total number of UAE public joint stock companies listed on the DFM that disclosed their annual results stood at 44 out of 45 companies, with the exception of Amlak Finance," it said.
Meanwhile, the DFM suspended trading on nine Kuwaiti companies that missed the deadline to provide the exchange with full and audited financial statements as per the UAE Securities and Commodities Authority.