Equities on the Dubai Financial Market (DFM) moved in a restricted range yesterday amid lacklustre trading.
The gainers outnumbered the losers as the general index moved up marginally by 3.88 points, or 0.24 per cent, to end the session at 1,596.79 points.
Mirroring the underlying positive outlook, 16 stocks advanced, eight declined and five closed flat.
Some market players seem to have priced in the impact of uncertainty over Dubai World's restructuring plan.
However, many still have doubts and that had a negative influence on market sentiment.
There is no news to push the market up or pull it down as retail investors and institutions are in wait-and-watch mode.
However, the market has already priced in adverse conditions and is waiting for any positive trigger that will boost trading sentiment and encourage investors to take fresh positions.
"The market was moving sideways in directionless trading," Taimur Saadat, Head of Technical Analysis at Arab Capital Markets Resource Centre, told Emirates Business. "Major sectors are not doing well. This is one the main reasons for why the market is not going in any particular direction."
Barring the banking index, which fell 0.16 per cent, the remaining sub-indices closed with gains of less than one per cent. Union Properties and Arabtec closed in the red while Emaar made a marginal gain of 0.67 per cent to close at Dh3.
"The present bleak trading scenario would lead to another drop that would follow the global cues," said Saadat.
"In these range-bound conditions, the market has to take a direction, and most probably it will move downwards. The real estate sector is vulnerable. At this juncture, the consumer staples sector should be the best option to trade as they are attractive. Gulfa and United Foods seem to be positive."
After rising 1.4 per cent on Sunday, Arabtec eased 0.92 per cent to close at Dh2.15 as the stock witnessed Dh31.08 million trading and volume of 14.35 million shares.
"Arabtec eased on quick profit booking and is likely to fall further on a short-term basis. Overall the stock is hovering in a downward movement in a bearish market." Dubai Islamic Bank stock closed flat with a minuscule gain of 0.44 per cent at Dh2.28.
"DIB may surge today as the stock is building some bullish momentum. After a brief rise, the stock will fall in line with the overall bearish trend," said Sadat.
Analysts expect the market to trade flat-to-negative this month as investors take another look at current valuations. Despite moving upwards in a narrow range for the past two sessions, the general index was trading below the key 1,600-point level. Market players are optimistic that a break above this level will keep the market in positive territory. Otherwise it may slip further.
"The index failed to breach the critical 1,600 mark for the past couple of sessions," he said.
Mirroring the market's wait-and-watch attitude, the DFM yesterday recorded trading turnover of Dh205.54 million against the previous day's Dh230m.
More than 120 million shares changed hands in 2,667 transactions involving 29 stocks.
As exposure to the Dubai World factor is already priced in, it is only a lack of interest following the uncertainty that has pushed the market into thin volumes.
"Volumes have been low for the past few weeks because of uncertainty," said Taimur Saadat. "Leading sectors such as realty and banking are not performing well." The major contributors to the trading were Emaar, Arabtec, du, DFM and Air Arabia as these stocks accounted for 81.39 per cent of the total trading.
Small investors are keeping the momentum going as institutions are almost out of the market.
The Securities and Commodities Authority (SCA) has approved the lifting of a share trading ban on Air Arabia's founders on condition that the general assembly meeting approves the removal of the ban.
As per the Article 173 of the UAE Company Law, the general assembly meeting should also approve the financial results for 2009 year before allowing the founders to sell or trade in their shares.
Air Arabia informed the exchange that the date of the board meeting has been changed from March 18 to March 22. Air Arabia shares added 1.02 per cent to close at Dh0.99 and the stock recorded Dh13.48 million trading as 13.65 million shares were traded.
Drake & Scull International (DSI) said it was not involved in projects with Dubai World. This followed the company's latest success in winning two contracts worth more than Dh90 million from Kuwait's education sector.
The contractor is keen on major development projects in Kuwait.
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