U.A.E. equities ended the week higher. Markets reacted positively to the Central Bank of the United Arab Emirates’ decision to reduce its base rate.
The Central Bank of the UAE cut the base rate for the overnight deposit facility by 25 bps to 3.65%. This was in line with the U.S. Fed’s decision. The interest rate applicable to borrowing short term liquidity was kept at 50 basis points above the base rate for all standing credit facilities.
- DFMGI (DFM General Index):
The DFM General Index closed higher, reclaiming its October highs near $6100. The index has closed at the AED 6,097.5 level, ending the week with a gain of almost 2%. This brings the year-to-date gains to nearly 18%.
Sector wise, the consumer discretionary sector increased by 6.4%. Other sectors that gained were, Materials, Communication services, Industrials, and Financials, each up approximately 2.5% to 2.8%. This depicts bullish sentiment and positive market breadth building across sectors, contributing to gains in the index. (Source: DFM report)
Some noteworthy companies that gained were Talabat Holding (+11%), Amanat Holdings (+9%), Dubai Investments PJSC (+7%) and Emirates NBD PJSC (+5%). The companies that were top laggards were Takaful Emarat Insurance PSC (-10.4%) and Sukoon Takaful PJSC (-9.5%). (Source: Bloomberg)
Technically, the index is trading at AED 6,097.5 and is above the 50-day SMA at AED 5,976.6 and the 200 day SMA at AED 5,696.1, respectively. The 14 period RSI is trending above 50, indicating strong bullish momentum in the index. A breakout above the AED 6,110 levels will propel the index towards the 52-week highs at AED 6,235.80. Otherwise, a support is observed at AED 5,950, followed by AED 5,900.
- ADX (Abu Dhabi Securities Exchange):
The FTSE ADX General Index was up 0.38% this week. It closed at AED 9,988.7. The up move was driven by the UAE Central Bank cutting rates in line with the Fed.
No major earnings releases were scheduled for this week and next week. (Source: Bloomberg)
Looking at leading sectors, the Utilities and Industrial sectors rose by 2.91% and 2.62%, respectively. The Health Care and Consumer Staples sectors were lagging by -1.27% and -1.17%, respectively. (Source: ADX Reports)
Looking at individual companies, the top gainers were Alpha Dhabi Holding (10.76%), Aldar Properties (5.08%), Abu Dhabi National Energy Co. (4.17%), and First Abu Dhabi Bank (2.3%). On the contrary, major laggards were Abu Dhabi Commercial Bank (-2.96%) and ADNOC Drilling (-1.09%). (Source: Bloomberg)
Technically, the index is trading above the 9 and 21 SMA on the daily time frame. Immediate support is at AED 9,900 and then at the 200 SMA level of AED 9,841. Immediate resistance is at 100 SMA level of AED 10,087, followed by AED 10,149.
