Dubai: Saudi stocks, which have been underperforming compared to their regional peers, rose on Tuesday, extending gains for a third session, the benchmark recovering from its lowest level in more than six months as firm oil prices boosted risk appetite.

On Tuesday, the Tadawul index closed 1.01 per cent higher at 6,131.32, after gaining 2.62 per cent in the previous two sessions, The gauge hit its lowest level in 6 months last week.

“Oil prices are keeping fairly robust, and that is what is supporting the markets,” Saleem Khokhar, head of equities at National Bank of Abu Dhabi’s asset management group, told Gulf News.

Oil prices, from which all of the Gulf countries derives most of their revenues from, neared $50 per barrel mark again, building gains after it entered into a bull market on August 18. Saudi Basic Industries Corp closed 0.80 per cent higher at 83.25 Saudi riyals. Saudi Kayan Petrochemical Co. closed 0.76 per cent higher at 6.65 riyals. Altayyar Travel Group closed 4 per cent higher at 36.30 riyals. Alinma closed more than a per cent lower at 12.60 riyals.

About 132 stocks ended in green, while other 32 shares closed in the negative.

Overall, the Tadawul index has been an underperformer in the region. The gauge has shed more than 11 per cent since the start of the year, compared to 12 per cent gains.

“Saudi index is an oil price story, but the underlying fundamentals are still challenging. Saudi valuations are at its lowest level in 8-9 years,” said Khokhar, adding: “you have to balance the valuations against oil price impact on governments revenues and spends.”

In the UAE, the Dubai index closed 0.54 per cent higher at 3,513.20, while the Abu Dhabi Securities Exchange General Index closed almost flat at 4,494.42. Gulf Finance House closed more than 4 per cent higher at Dh0.990, while Arabtec closed 2.08 per cent higher at Dh1.47.

Dull market

“Markets are very dull, We are heading towards Eid, a lot of players will unwind positions,” said Khokhar.

Volumes have been tumbling and have not recovered after the summer lull. On Tuesday, shares worth Dh372 million were traded, about half compared to a few weeks ago. “We expect volumes to recover after Eid,” said Khokhar.

Elsewhere in the region, the Qatar exchange index closed 0.47 per cent higher at 11,314.55, ahead of the formal inclusion on the FTSE emerging market index.

“Names and weights will be out in Qatar, so we saw good gains there. I wouldn’t be surprised to see an initial strength followed by profit taking,” said Khokhar.

The list of a final list of stocks on the FTSE index to be included will be announced after the close on Wednesday. Kuwait Stock Exchange index closed 0.31 per cent higher at 5,421.43.