Sellers to decide markets' trend amid lack of catalyst
The UAE markets are likely to remain listless this week amid negative sentiments in the absence of any clear indications of uptrend.
The Dubai Financial Market (DFM) is expected to face further pressures this week after the index broke through its important support area around 1725 points.
The DFM index faced gradual downturn last week and lost 7.06 per cent to close at 1707.37 points. The downturn in the market came amid significant decline in the turnover.
"Sellers were deciding the trend in the market last week as they were holding their positions in general," said Hossam Al Husseini, Head of Brokerage at Emaar Financial Services.
"The DFM is facing trendless direction and sellers will decide movements in the market this week. If they maintained last week's levels of selling we expect stabilisation in the market but if they increased their selling pressures we may witness further declines in the market."
"Institutional investors were selling last week and their pressures were the main factor in the continuous decline in the DFM index. However, we expect that they will start returning to the market very soon to accumulate stocks at lower prices. If this trend appeared this week we expect some bounce in the market," Al Husseini added.
Ahmed Hetta, Head of Research at Tadawul for Shares and Bonds Mediation, sees that the DFM market is oversold last week and may stabilise this week. "We witnessed continuous decline in the DFM index which went down to 1697 points during intraday trading on Wednesday. That level gave indications that the market is oversold and on Thursday the DFM stabilised and bounced back above the 1700 points which is giving more indications of stabilisation."
The DFM witnessed significant decline in the turnover as the average daily trade values reached Dh452 million last week. There were moderate selling pressures but buyers almost disappeared from the market.
Al Husseini said: "This level of the turnover has been dominating the market for around one month. Even during the uptrend in the DFM there were no strong buyers. There is no strong catalysts that may affect the sentiment. Last week we witnessed some positive expectations of earnings but the market ignored them.
"However, we do not expect strong selling pressures because we did not witness strong accumulation in the past few weeks and there is no room for profit booking. There may be a downturn trend but at very limited levels," he added.
The sentiment in the DFM may also affect the trend in Abu Dhabi Securities Exchange which lost 2.46 per cent last week to close at 2707.20. The ADX index is trading near its support area of 2700.
Hetta said: "The ADX changed its sideways trend last week and went down. It also failed to maintain its support of 2780 points. If the ADX index breaks down the support of 2700 points it will open the way for further declines to its next support around 2550 points.
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