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29 November 2023

Profit-booking erodes DFM's early gains

By Sreenivasa Rao Dasari

The Dubai Financial Market was unable to sustain its early gains yesterday as investors booked profits in the second half of the session.

However, banking and finance and investment stocks helped the index to close on a higher note for the third consecutive day.

Mirroring the sideways trading, the general index moved in a narrow range of 25 points and gained 11.09 points to end the session at 1659.55 points, a net rise of 0.67 per cent from 1648.46 the day before.

Ajman Bank, Dubai Islamic Bank, Emirates NBD and Gulf Finance House (GFH) were the gainers among the banking stocks, while Al Salam Bank-Bahrain closed flat at Dh0.85.

Ajman Bank added 3.66 per cent and closed at Dh0.85, Dubai Islamic Bank shares rose 0.46 per cent to Dh2.17, Emirates NBD stock rose 3.61 per cent to Dh2.58 and GFH rose 0.92 per cent to Dh1.10.

"It was profit taking in the second half of the session that eroded the early gains," Hussam Al Husseini, Head of Brokerage at Emaar Financial Services, told Emirates Business. However, the positive sentiment continues and there are prevailing positive factors in the market."

After attracting buying interest during early trading, market bellwether Emaar closed flat on profit booking. Fellow realty majors Arabtec and DSI closed in the red, while Union Properties shares added 3.85 per cent to close at Dh0.54.

Senior financial analyst Wadah Al Taha said: "The accumulated increase during the session eased on profit taking in the second half. Emaar stock alone accounted for almost half of the trading turnover. I think this type of trading indicates positive expectations about the fourth-quarter results."

Emaar registered Dh149.54 million of trading transactions – for 44.45 per cent of the total trading turnover on the bourse.

Al Taha added: "I expect that Emaar will announce its results on Saturday and if so this is likely to result in profit taking on Sunday. We have already seen the forward movement in the stock from Dh2.88 level ahead of fourth quarter earning numbers. This will continue based on expectations of positive results from the property major."

The DFM recorded gains by 11 stocks and losses by four, while 11 closed flat. The market saw total trading worth Dh336.37m as more than 193 million shares changed hands in 4,365 deals involving 26 stocks.

"Trading value was down," said Al Taha. "I think the liquidity factor is dependent on market sentiment, which is under pressure in the absence of any clear direction and positive major triggers. Dubai World's next payment will ease the tension in the market and stabilise sentiment."

The DFM witnessed another positive opening as the index resumed trading at 1653 points on Dh10m turnover as buying support extended to Emaar, Arabtec, DFM, GFH, Ajman Bank and Air Arabia. Aman was trading flat in early trading, while DSI and Deyaar faced selling pressure.

The index was propped up mainly by Emaar, Arabtec, DFM and Union Properties, which accounted for 60 per cent of the trading in the first half. This took the index up to 1673.78 points, which remained the session's high. Trading value improved further to Dh236m at 1pm.

Shiv Prakash, senior technical analyst at MAC Capital, said: "Market circles expect good results from Emaar, thus the stock is witnessing some bullish moves from support levels. It traded above the neckline levels and closed at Dh3.26. The stock could face selling if gives a close below the support levels of Dh3.22 on the day chart."

After being range-bound in the first half-hour of trading, the index gradually showed upward movement as 16 stocks traded in positive territory and came under pressure. The trading turnover improved to Dh145m.

Prakash added: "Intraday, if the market remains below the pivot levels of 1660 we could see some profit taking until the lower support levels of 1647/1636."

No rally without institutional support

Analysts are asking themselves whether the limited positive buying movement on the UAE bourses resulting from the fourth-quarter results will translate into a fresh rally.

Key factors such as the upward movement of the global markets and the rise in the oil price – which has been hovering at $77 per barrel – are favouring market conditions on the bourse, but the hurdle of poor participation of institutions and foreign investors is still haunting the market.

"Most investors are waiting for the right time to accumulate fresh positions," said Hussam Al Husseini.

"They are expecting Emaar to cross Dh3.35, DFM to cross Dh1.68 and Arabtec to cross Dh2.35 levels. Renewed buying interest could be seen if these stocks break those levels, and this would take the market to the next upward level. Otherwise positions will be liquidated."

The gains made so far on the bourse were due only to immense support from retail investors, who have gradually started to favour banking stocks.


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