QNB Weekly Market ReportThe Qatar Exchange (QE) Index gained 39.06 points, or 0.40%, during the week, to close at 9,886.68 points. Market capitalization increased by 0.39% to reach QR541.4 billion (bn) as compared to QR539.3bn at the end of the previous week. Of the 42 listed companies, 21 companies ended the week higher, 19 fell and 2 remained unchanged. Zad Holding Co. (ZHCD) was the best performing stock with a gain of 10.83%; the stock is up 13.10% year-to-date (YTD). Widam Food Co. (QMLS) was the top decliner, down 4.95%; the stock is down 5.27% YTD. The QE Index reached a four-year intraday high of 10,008.05 during the week before Thursday’s profit taking. Our overall market view remains that while the Qatari equity market underperformed in 2012, we expect newsflow concerning major project mobilizations and strong bottom-line growth of key companies to bolster returns in 2013. The QE Index underperformed in 2012 with persistent foreign institutional investor selling. The tepid performance last year was partly due to the outperformance in 2011 and partly due to persistent selling by foreign investors during this period. Foreign institutions (FIs) have been net buyers to the tune of QR2.60bn (Jan. 2013 to August 15 2013) versus net selling of QR2.5bn in 2012. YTD FIs have been bullish on QNB Group (QNBK, 9.80 million [mn] shares net buying), followed by Doha Bank (DHBK, 5.61mn shares) and Gulf International Services (GISS, 4.50mn shares). On the other hand, the Commercial Bank of Qatar (CBQK, 6.09mn shares net selling), Mazaya Real Estate Development (MRDS, 3.35mn shares) and Qatar Insurance Co. (QATI, 3.17mn shares) saw net selling on a YTD basis. We suspect the market could see some consolidation before making a move higher. Trading value during the holiday-shortened week decreased by 13.42% to reach QR900.8mn, as compared to QR1.0bn in the prior week. The Banks & Financial Services sector led the trading value during the week, accounting for 30.58% of the total equity trading value. Trading volume decreased by 9.17% to reach 19.8mn shares, as against 21.8mn shares in the prior week. The number of transactions fell by 16.97% to reach 11,015 transactions versus 13,267 transactions in the prior week. The Banks & Financial Services sector led the trading volume, accounting for 28.42% of the total. Foreign institutions turned bearish for the week with net selling of QR48.6 thousand versus net buying QR2.4mn in the prior week. Non-Qatari individuals were net sellers of QR57.6mn versus net buying of QR15.5mn in the prior week. Qatari individuals were net buyers of QR41.5mn versus QR18.5mn in the prior week. Finally, local institutions were net buyers of QR16.2mn versus net sellers of QR36.3mn the week before.DISCLAIMERThis report expresses the views and opinions of QNB Financial Services SPC (“QNBFS”) at a given time only. It is not an offer, promotion or recommendation to buy or sell securities or other investments, nor is it intended to constitute legal, tax, accounting, or financial advice. We therefore strongly advise potential investors to seek independent professional advice before making any investment decision. Although the information in this report has been obtained from sources that QNBFS believes to be reliable, we have not independently verified such information and it may not be accurate or complete. Gulf Times and QNBFS hereby disclaim any responsibility or any direct or indirect claim resulting from using this report.
The QE Index ended the truncated week on a bearish note and ended its brief rally of tagging a new 52-week high. The index witnessed selling pressure on Thursday and retraced around 1.2% from its weekly high of 10,008.05. On Tuesday, the index surpassed the 9,900.0 level, while on Wednesday the index managed to breach above the 10,000.0 psychological level for the first time since September 2008. However, the rally was short lived due to profit booking on Thursday, which brought the index well below the breakout point of 10,036.40 and erased most of the gains witnessed during the last week. The index has a support at the 9,875.80 level, which is within striking distance. We believe if the index penetrates below this level, it may prompt testing the 9,800.0 level, which may provide buying opportunities. However, a further decline below this level warns a potential threat to test 9,700.0. Moreover, the RSI has shown a bearish divergence, indicating a likely retracement. On the flip side, we believe that the uptrend in the index is intact as long as it respects the lower end of the channel and move higher, retesting the 9,900.0-10,000.0 levels. Traders may continue to remain bullish, but are advised to exercise caution to gain some certainty of the index’s direction this week.Definitions of key terms used in technical analysisRSI (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.