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Dubai market showing signs of consolidation |
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9/3/2008 10:39:22 AM |
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The Dubai Financial Market (DFM) is giving signals for consolidation despite the continuous decline in its index, which lost 29 points, or 0.61 per cent, and closed at 4715.73 points yesterday.
The turnover was poor and is projected to continue around current levels in the next few sessions. Trade volume reached 103.6 million shares at a total value of Dh459.7 million. The banking sector was the main loser as ENBD, DIB and Tamweel stocks were among the top losers, while Emaar continued to lead the most active list and created increasing pressure on the index after it declined to Dh9.
Analysts said selling pressures at the current stage have no justifications because P/E ratio in some stocks reached levels reported in 2002. However, it was clear that local investors disappeared from trading stages in the UAE stock markets during the first two sessions of Ramadan and this situation is projected to continue for a week.
Despite the continuous decline in the index during the last few sessions, analysts said the market was stabilising and would be able to create a base soon.
"The index is losing around half a percentage point in every session. The current pace of decline is showing that the market is stabilising. The turnover is ranging at low levels, giving indications that the selling pressures in the DFM are decreasing," said Nour Al Zouby, general manager of MAC Sharaf Securities.
"Selling pressures by foreign investors have also reached very low levels. However, there is increasing lack of liquidity in the market and this needs strong entry from institutional investors to lead the market into an upward trend. Small investors and speculators are leading the market now and this situation cannot continue," Al Zouby said.
He said some real liquidity was entering the market and this would support the consolidation of the index. "The market was dominated by speculators and short-term investors until recently. Also, foreign institutional investors were selling heavily during the last two months. Prices have reached very low levels and this is a very good chance for institutional investors, " Al Zouby said.
Shiv Prakash, equity investment analyst at MAC Capital, said the DFM opened below the intra-day resistance area of 4,750 and fell on low volumes until the second intra-day support near 4,675 points. "Later the index recovered to near-opening levels on select buying but could not close in the green, ending up 29 points lower. The market is dull due to lack of buying support and is behaving sideways. The main support is at 4,650 points, which is still intact."
He said Emaar's stock touched its previous low levels but stayed above the support areas.
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Source: Business24-7.ae |
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