Dubai: Volatility in UAE markets would continue, and its too early to call a bottom, market participants said on a day when the Dubai index posted record daily gains.

The Dubai index ended 12.98 per cent at 3,426.70, after gaining as much as 13.2 earlier in the session. The index was the best performing market among more than 90 gauges tracked by Bloomberg globally.

“Volatility should stay high, even though crude oil has stabilised. It’s too early to say we have reached a bottom, despite of the fact that valuations are very very attractive,” Sebastien Henin, head of asset management at The National Investor told Gulf News.

Oil headed for its biggest gain in more than two weeks in New York amid speculation that crude’s plunge to a five-year low may have been excessive.

WTI and Brent have slumped about 45 percent from this year’s peaks in June as a surge in shale drilling lifted U.S. output to the fastest pace in three decades amid slowing growth in world demand.

Members of the Organization of Petroleum Exporting Countries including Saudi Arabia, the world’s largest exporter, have resisted calls from producers such as Venezuela and Ecuador to reduce output to stem the price drop.

“It’s going to be choppy going ahead because short-term investors who made money today would want to get out. I think anybody who is going to invest due to dividend trade will stay,” said Sanyalaksna Manibhandu, Manager of Research, NBAD Securities.

The companies will start announcing dividends in the second quarter of next year.

Accumulate stocks:

“It’s a good environment to accumulate quality stocks, where we have good visibility on business, attractive valuations and good dividend yield,” said Henin.

The profits of national companies listed in the market have exceeded Dh48 billion during the first nine months of 2014, a growth rate of 28 per cent from the Dh37.3 billion recorded during the same period last year, UAE’s minister of economy Sultan Saeed Al Mansouri said in a statement earlier in the week.

Henin likes banking stocks First Gulf Bank, Emirates NBD as valuations are cheap, and due to better dividend yields, with limited exposure to oil sector.

Profitability of the UAE’s banking sector will continue to remain stable as margin pressures are moderated by asset-quality improvements, recoveries and asset growth, according to credit rating agency Moody’s.

On funding side, over the outlook horizon, analysts expect strong deposit growth in the UAE to increase the contribution of customer deposits to around 65 per cent to 70 per cent of total assets. Despite significant contractual maturity mismatches, historically, most of these deposits have been stable during past crises.