The outlook for the Dubai Financial Market (DFM) in 2010 looks quite positive as the confidence level in the market has gone up following the $10 billion (Dh36.77Bbn) loan from Abu Dhabi.
Dubai's tourism sector is poised for rapid growth. Tourists are finding Dubai a bargain as the currency is losing value. Low hotel room rates stimulate demand and could help to make the emirate a travel hotspot in 2010, and the Burj Khalifa – the world's tallest tower – will prove a major attraction.
The general index is trading on a good support level of 1800. The next lower support comes at 1730, which is the 50 per cent retracement level of the rise from 1460 to the recent highs of 2000 and should remain intact. Immediate resistance for the market comes near 2000 to 2050, and any close above these levels would mean we are heading higher towards 2400 in the coming sessions. On the monthly charts, we see a clear hammer formation, which indicates a good reversal in the market after recent volatile sessions. MACD is turning positive with RSI moving up from the thirties. Emaar, Arabtec and DFM are the stocks that can gain further momentum and lift the index towards the higher resistance levels.
Emaar is trading near the strong support levels of Dh3.96 which is attractive to buyers, with resistance seen near Dh4.14. A clear close above Dh4.15 could trigger a rally until the next higher levels of Dh4.60/Dh5.00/Dh5.85 in the coming months.
Arabtec, which is trading above the long-term trend line resistance, stands bullish with immediate neckline resistance of Dh3. A break above this could bring another bullish move until the next higher levels of Dh3.20/Dh3.60/Dh4.20.
DFM stock is moving in the range of Dh1.84 to Dh1.97, with a breakout to Dh2.10 as the first target. We could then see Dh2.40 if the market surges above the 2000 mark. Together these stocks, if they witness the expected rally, could lift the index to the 2200/2400 marks in the short to medium term.
The property sector is expected to see some stabilisation as prices have already seen a fall of 50 to 60 per cent from their highs. This looks a good support and could attract fresh buyers around these levels.
The logistic sector could attract good buying as it is expected to see good growth this year as companies are becoming more global in terms of sales and sourcing business.
- The author is an equity investment analyst at MAC Capital Advisors
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