WEEKLY MARKET REPORT
The Qatar Exchange index appreciated by 137.45 points, or 1.59%, during the week, to close at 8,790.73 points. Market capitalisation rose by 1.75% to reach QR 463.3bn as compared to QR 455.4bn at the end of previous week. Out of the 42 listed companies, 28 companies ended the week higher, while 12 fell and 2 remain unchanged. Dlala Holding was the top gainer for the week with a gain of 24.26%, while Al Khaleej Takaful Group was the top decliner for the week with a decline of 6.46%.
On the regional front, Saudi Arabia was the best performing market, where the index was up 3.2% during the week (until Wednesday, March 28). Qatar was the second best performing market, where the index was up almost 1.6%. On the other hand, the Omani index declined by 4.5% (primarily due to key index stocks going ex-dividend). Despite taking a pause ahead of first quarter results, the Dubai index still remains the best performing index on a year-to-date basis, up 21.8%.
Trading value during the week declined by 1.73% to reach QR1,705.3 million compared to QR1,735.3 million in the prior week. The services sector led the trading value during the week, accounting for 57.47% of the total trading value, followed by the Banking & Financial sector, which accounted for 25.51%. The Industrial sector ranked third, accounting for 15.26% followed by the Insurance sector with a 1.76% share.
Trading volume decreased by 15.20% to reach 54.0 million shares, as against 63.7 million shares in the prior week. The number of transactions rose by 5.31%, to reach 26,052 transactions as compared to 24,738 transactions in the prior week. The Services sector led the trading volume during the week, accounting for 68.6% of the total trading volume, followed by the Banking & Financial sector, which accounted for 17.44%. The Industrial sector ranked third, accounting for 12.91% followed by the Insurance sector with a 1.05% share.
Foreign institutions became bullish and demonstrated increased activity in the market. Of the trading value, non-Qatari institutional buying increased to 18.6% versus 13.4% in the prior week. However, selling decreased to 16.6% versus 18.6% in the prior week. Non-Qatari institutions were net buyers to the tune of QR33.4 million versus net selling of QR90.6 million in the prior week. Qatari institutions remained bullish with net buying of 5.5% and their net buying intensity was up from 3.8% in the prior week. Overall Qatari institutions and retail investors were net sellers of equities to the tune of QR38 million, while foreigners were net buyers for the week ended March 29, 2012.
Result season is starting from next week. Index heavyweight QNB will announce its results in the first week of April 2012. We believe the market will take a direction as the results season comes into full swing. On the valuation front, the QE index is trading at attractive multiples, with a TTM P/E ratio of 10.5x complemented by a dividend yield of 4.4%.
Technical analysis of the QE index
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The QE index remained bullish during the week and rose by about 137.5 points (1.59%) to close at 8,790.7. However, the index seems to be facing uncertainty near the top end of the recent range. 8,800.0 is the level that had previously restricted the index’s steep ascent during mid-February. Despite this, it seems that the overall trend is still postive as the index did not show any weakness during the week ended March 29. Moreover, there is still plenty of room for the RSI to move upward without climbing into an overbought zone, while the MACD continues to grow positive as well. Hence, the coming week will provide a critical test for the index. A rise back above the 8,800.0 levels would mean the upward move is not over and could set the stage for a test of this year’s high at 8,910.2. On the other hand, any weakness in the coming days may find buying support near the moving averages at 8,682.9 and 8,638.8 levels, respectively
Definitions of key terms used in technical analysis
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RSI (Relative Strength Index) indicator – RSI is a momentum oscillator that measures the speed and change of price movements. The RSI oscillates between 0 to 100. The index is deemed to be overbought once the RSI approaches the 70 level, indicating that a correction is likely. On the other hand, if the RSI approaches 30, it is an indication that the index may be getting oversold and therefore likely to bounce back.
MACD (Moving Average Convergence Divergence) indicator – The indicator consists of the MACD line and a signal line. The divergence or the convergence of the MACD line with the signal line indicates the strength in the momentum during the uptrend or downtrend, as the case may be. When the MACD crosses the signal line from below and trades above it, it gives a positive indication. The reverse is the situation for a bearish trend.
Candlestick chart – A candlestick chart is a price chart that displays the high, low, open, and close for a security. The ‘body’ of the chart is portion between the open and close price, while the high and low intraday movements form the ‘shadow’. The candlestick may represent any time frame. We use a one-day candlestick chart (every candlestick represents one trading day) in our analysis.
Doji candlestick pattern – A Doji candlestick is formed when a security’s open and close are practically equal. The pattern indicates indecisiveness, and based on preceding price actions and future confirmation, may indicate a bullish or bearish trend reversal.