Lack of positive triggers drag DFM lower by 4.14%
The Dubai Financial Market (DFM) took a nosedive yesterday, taking cues from weakening global markets and the absence of positive triggers, dragging its index down by 4.14 per cent.
The DFM general index tanked 80.78 points to close the session at 1872.81, compared to its previous close of 1953.60 points. This was the first major fall in the DFM after June 28, when it recorded a whopping loss of 113.96 points.
Amjad Bakir, trading manager at MAC Sharaf Securities, told Emirates Business: "It's purely panic selling by both retail investors and institutions following the bleak scenario on global markets."
Vyas Jayabhanu, Head of Al Dhafra Financial Broker, said: "More than profit taking, it was a major technical correction for the DFM index after an encouraging rally."
The lone star to shine on the DFM was the Al Salam Bahrain stock. Reflecting the overall bearish trend, 25 stocks declined, one advanced and another scrip remained at its previous close.
Barring Al Salam Bahrain, bank stocks Emirates NBD, Dubai Islamic Bank (DIB), Commercial Bank of Dubai (CBD), Al Salam Bank Sudan and Ajman Bank recorded losses. Ajman Bank shares fell 2.65 per cent to Dh1.10, Al Salam Sudan eased 0.38 per cent to Dh2.60, DIB shares slid 3.41 per cent to Dh2.55 and Emirates NBD dropped by 3.43 per cent to Dh3.66, while CBD shares closed flat. Another banking major Mashreq Bank's shares dropped 4.92 per cent to Dh100.40.
"We don't have any bad news locally to affect market sentiment. It was global cues, with Asian and European markets trading lower. Market players were awaiting the outcome of the US Federal Reserve's two-day meeting," said Bakir.
At 11.30am, 22 stocks were trading lower, while two remain unchanged at their previous levels. No stock was trading in positive terrain in the first half of the session owing to lack of buying support, as retail investors and institutions were busy with profit booking from the market that indicated an eight-week high at 1953.60 points on Tuesday.
At one point of time, the DFM general index fell more than 88 points. Recording a continuous fall during the session, the index touched 1864.77 points at 12.15pm, showing the day's low as the selling binge taking a toll on the equities.
Shiv Prakash, technical analyst at MAC Capital, said: "The DFM general index is in its support channel of 1875 points. The lower strong support comes at 1855."
Realty stocks bore the brunt of trading as Arabtec, Deyaar, Drake and Scull International (DSI), Emaar Properties and Union Properties (UPP) all witnessed heavy selling pressure. UPP and Emaar led the losers on the bourse.
Arabtec's shares fell 6.48 per cent to Dh2.74, Deyaar's stock was down by 3.80 per cent at Dh0.76, DSI fell 3.23 per cent to Dh0.90, Emaar dropped by 6.87 per cent to Dh3.12 and the UPP stock fell 5.93 per cent to Dh1.11.
Insurance stocks Takaful Emarat eased 6.91 per cent to Dh1.75 and DarTakaful shares fell 8.33 per cent to Dh2.53.
Analysts said after registering a good rally, the bourses needed some positive news to sustain their momentum and that has not happened. Owing to lack of positive news flow from companies, the rally seems set to ease and yesterday's fall was just the beginning, commented a broker. Regional bourses are moving in tandem with global markets of late. Most global markets are in retreat after reaching an 11-month high.
"On Tuesday also, the market opened with volatility and yesterday there was a heavy fall. This indicates uncertainty prevailing in the market. US data showing a fall in business inventories also impacted trading sentiment, as regional markets took their cues from global ones. Moreover, market players were not confident of taking fresh positions ahead of the Ramadan season. Investors, too, are not clear about the direction of the market," said Jayabhanu.
Tabreed's shares recorded a loss of 4.12 per cent and closed at Dh0.93. Shuaa Capital's stock fell 3.64 per cent to Dh1.59.
Market may bottom out today
Going by the trading pattern this week, experts forecast that the Dubai bourse may show some sort of resilience on Thursday, the last session of the current week.
The DFM has registered gains in two sessions and falls in two sessions this week, with the market recovering on Monday and Tuesday.
"The DFM may find its bottom today as there is no bad news impacting trading sentiment. Chances are brighter for this. If Emaar doesn't slip below Dh2.90, the stock will pick up and this will result in a recovery on the market," predicted Jayabhanu.
"The next support level is 1850 points, and from there the market may rebound towards 1900 on fresh buying activities," said Bakir.
Trading turnover on the DFM was at Dh720 million yesterday, up from Dh609m on Tuesday. More than 410 million shares changed hands in over 8066 deals in 27 scrips. In order to sustain the present rally, the DFM needs to witness turnover values of more than Dh1 billion for a few sessions.
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