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05 October 2023

Dubai oil discovery report set to fuel stock buying

The fall on the global markets may impact local market sentiment negatively. (DENNIS B MALLARI)

By Sreenivasa Rao Dasari

Buoyed with the new oil discovery report in Dubai's Al Jalila offshore oilfield, the marginal buying momentum on the UAE bourses is expected to get a boost this week, taking the equities to a further high.

However, the weekend fall on the global markets may impact local market sentiment negatively. Therefore, a mixed outlook is expected for the UAE bourses following the good news in the form of the oil discovery and the adverse conditions in the global markets.

Wadah Al Taha, a senior financial analyst, told Emirates Business: "Hopefully, the local markets will not bleed owing to the drop in global markets. The new oil discovery is definitely a major boost to market sentiment. But it will take time for its impact to sink in.

"The returns from the new oilfield will probably start from mid-2011."

Contrary to expectations, Emaar has not announced it fourth quarter results. Market players are disappointed over this and are looking forward to the announcement, which can intensify the ongoing positive momentum on the bourse.

In the absence of any unexpected shocks and adverse news during the period of fourth quarter result announcements, the market was hovering generally close to the positive terrain.

"If Emaar announces its results by today, this is likely to result in profit taking in the market, said Al Taha.

"Still, I doubt the sustainability of its share at the current price, because we have already seen forward movement in the stock from Dh2.88 ahead of fourth quarter earnings announcements. This will continue based on expectations of positive results from the property major. Further delay can't serve the market." he said.

Despite showing an overall positive movement during the previous week, the UAE bourses closed on a mixed trading pattern, as the Dubai bourse ended marginally higher while the ADX ended the last session of the week in the red.

"The DFMGI closed at 1663.21points – almost near the previous closing levels – with a marginal gain of 0.22 per cent. The index is struggling to close above the long-term trend line resistance levels of 1670 points and finds it difficult to close higher as volumes are very low with no fresh flow of funds seen as yet. We expect profit taking," said Shiv Prakash, senior technical analyst at MAC Capital.

The DFM witnessed a rise of 3.98 per cent during the previous week, with the index adding 63.78 points to close the week at 1663.21 points from 1599.43 points a week ago. Dubai's bourse moved northwards for a fourth consecutive session during the previous week.

After gaining for six sessions in a row, the ADX general index retreated on Thursday. The market netted a gain of 77.27 points or 2.94 per cent and closed the week at 2705.44 points.

"Intraday, the market is expected to face selling pressure and can go below the pivot to 1626 points – the lower support. Higher resistance could come near 1670 points, which is the trend line and the first resistance on the pivot table," said Shiv Prakash.

The UAE bourses were moving in positive terrain following the encouraging fourth quarter earnings declarations.

However, the upward movement on the stock markets has been range-bound, on thin volumes and on poor participation.

The rally in local markets seems a short-term one, as it was not supported by strong fundamentals. After witnessing buying interest in early trading last Wednesday, Emaar's stock closed flat on profit booking.


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