UAE indices weak with focus on trading stocks

Going ahead, analysts expect a limited downside in UAE indices

Published: 17:10 February 24, 2016

Siddesh Suresh Mayenkar, Staff Reporter

Dubai: UAE indices ended lower on Wednesday dragged by weakness in blue chips along with oil, analysts said.

The Dubai Financial Market General Index closed 1.71 per cent lower at 3,137.34. Abu Dhabi Securities Exchange General index closed 0.42 per cent lower at 4,295.36.

Oil fell below $33 per barrel on Wednesday after Saudi Arabia ruled out production cuts and an industry report said US crude stockpiles hit a record, underlining the supply glut. Even locally weakness was witnessed in blue chip stocks among others.

“The focus was on Drake & Scull, and Deyaar in Dubai, and on Eshraq Properties in Abu Dhabi in terms of trading and traders were making use of opportunities due to volatility in the market,” said Marwan Shurrab, fund manager and head of trading at Vision Investments & Holdings.

Drake and Scull ended more than 2 per cent higher at Dh0.414, while Deyaar Properties ended close to half a per cent lower at Dh0.537. Gulf Finance House closed more than 4 per cent lower at Dh0.681. Amlak Finance closed 2 per cent lower at Dh1.37. Dubai Islamic Bank closed more than 2 per cent lower at Dh6.18.

“Having in mind the given bearish characteristics, long term traders should remain neutral at current times with the aim to reposition only after stronger trending characteristics appear on long term charts in Emaar Properties. The break below previous medium term support at 5.70 has shown further weakness in the share and points towards a downwards continuation,” Menacorp said in a note to clients.

Emaar Properties closed 2.41 per cent lower at Dh5.67. Out of a total of 36 stocks traded on the exchange, shares of 22 firms fell, while other 12 stocks rose, the rest remained steady.

In Abu Dhabi, the general index closed 0.42 per cent lower at 4,295.29. “Long and medium term traders should remain outside of the market while bearish scenarios continue to develop. In the medium term the market remains in a downtrend, with bearish momentum expected to return as long as the correction remains below previous Daily top at 4,320 in Abu Dhabi index. Having achieved first target of the bearish daily swing at 3,800, an extended move is expected to continue towards second target, outlined at 3,450,” Menacorp note added.

Eshraq Properties closed more than 12 per cent higher at Dh0.74. RAK Properties closed more than 1 per cent higher at Dh0.63. Aldar Properties closed more than 1.5 per cent lower at Dh2.45.

“The long-term trend is strongly Bearish at the time being as marked by the fall below many daily strong support zones. Long term bullish scenarios have been postponed for now and traders should be waiting for reversal patterns in this descend before considering new positions in this share. With the medium term testing the upper boundaries of the past 26 weeks, we await for stronger technical indications towards the next directional move, with an immediate break below 2.20 seen as an early sign of weakness in the share,” Menacorp note added on Aldar Properties.

Out of a total of 30 stocks traded on the exchange, shares of 13 firms fell, while other 8 rose.

Going ahead, analysts expect a limited downside in UAE indices. “We have seen lesser co-relation with international markets and volatility in oil. People are trying to play the volatility in prices now,” Shurrab said.

Earlier in the week, post the strong dividends from companies despite weaker than expected results from, the Dubai index reversed most of its losses registered to yield positive returns so far in the year. Dubai index is now up more than 2 per cent on year-to-date basis.

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