The Dubai Financial Market (DFM) ended the week on a positive note as the index gained 56.98 points to close at 5405.44 point, just above the psychologically important 5,400-level.

The market will remain closed today on account of Isra' and Mei'raj.

Eight sectors advanced and two sectors remained unchanged in the session, while 20 stocks advanced, three remained static and three declined. Trade value and volume also increased to Dh600.4 million and 145.4 million shares respectively. Air Arabia and Ajman Bank continued to lead the most-active list by volume, while Emaar topped the most-active list by value.

The rebound on the DFM in the session reflected expectations that the market will go through a sideways trend for the next few weeks with limited ups and downs near its support level of 5,400. However, analysts pointed out that the index will remain in the range between 5,400 and 5,600 points until the end of the current seasonal impact, which is expected to last till mid-August.

Hosam Al Husseini, head of brokerage and branches manager at Emaar Financial Services, said the seasonal effect was still dominating the market and it would continue for the next two weeks. "However, there are essential changes in the behaviour of heavyweight stocks such as Emaar during the previous few sessions. Leading stocks began to give positive settlement signals during the sideways movement and they are supporting the index instead of their previous pressures," he said.

"There are several positive indicators on the DFM that reflect a bottom in the market such as low trade value, low volatility and the index is above the important support level of 5,200 and there are positive signals from heavyweight stocks. Even during the short correction during the last few sessions, the trade value was dropping and this indicates that the index will not go below current levels," he added.

Husseini highlighted other important indicators of the bottom in the market such as the high trading on select stocks while their prices were not moving up. "This came from increasing speculations and the lack of clear vision of the market's directions."

"This situation reduced volatility in the market sharply and low volatility always leads to sharp high volatility, which may start by mid-August. There is high liquidity outside the DFM waiting for the right opportunity to enter the market and we expect this will start next week.

"We saw institutional and foreign investors selling aggressively during the past few weeks, but this will start to change next week because they will start building up their holdings and positions in the market before the last quarter, which is usually the most active quarter in trading," he said.

Husseini said the strong liquidity position and high trade value during the next few sessions are likely to end the negative sentiment among investors.


Next stop 5,550?

DFM is projected to start a short-term upward trend next week until its strong resistance range of 5,500-5,550 points. "Trade value and movements of prices of leading stocks will determine the strength of this trend. We expect investors to react to positive results of listed stocks next month," said Hosam Al Husseini.

"Fluctuations in the DFM index were limited for a long time, so investors became more convinced that the market will not go down any more. The risk is that there may be a rush to enter the market and create very high volatility which may be followed by sharp corrections."



ADX reverses trend


ADX reversed the earlier trend by the end of the week and gained 45.57 points, or 0.92 per cent, and closed at 4976.15 points. Trade value surged to Dh769.6 million and trade volume increased to 155.6 million shares. Aldar and Dana Gas were leading the most-active lists by value and volume.

Despite Aldar's announcement of very strong results as its profit increased by 186 per cent, the stock moved in a very limited range and closed at Dh12.30. Analysts attributed this trend to the sideways movement in the index, which is expected to continue during the next week.

"Despite the upward medium-term trend in the ADX, the market has a short-term down trend during the current few weeks. This correction will be short because ADX has several positive indicators. The index could regain yesterday most of its losses during the previous three sessions and it is still trading at its support level of 5,000 points," said Mohamad Al Beheiri, head of trading at Amana Financial Services.

"The ADX index will continue to fluctuate between its strong support level at 4,890 points and its resistance level at 5,150 points. Despite the positive sentiment, speculations are increasing on penny stocks due to the lack of indications for the upward trend."