Sentiment is likely to remain weak in Egypt after President Mohamed Mursi declared a month-long state of emergency, while investors in UAE markets are seen shifting focus to stocks that have under-performed in the current rally.
A nightly curfew will begin on Monday in three cities along the Suez Canal, where dozens of people have been killed over the past four days in protests that Mursi's allies say are designed to overthrow him.
Cairo's benchmark ended flat on Sunday after an early decline in the first trading session since weekend rioting killed 32 people. Non-Arab foreigner investors were net buyers.
In the United Arab Emirates, heavyweight banking and property stocks lifted Dubai's index above a long-term resistance level on Sunday to a fresh 33-month high.
"Quality names have strong fundamentals but we should have a respite, a sector rotation," says Sebastien Henin, portfolio manager at The National Investor. "Investors will have more appetite for mid-cap names compared to bluechips, which have performed very well."
Second-tier names in the banking sector are likely to come into focus, he adds.
"Valuations are fine at this point but the momentum of the rally is overheated."
In Abu Dhabi, shareholders of Aldar Properties and Sorouh Real Estate will vote on their proposed merger next month and the deal is expected to be completed by end-June, the companies said in a joint statement.
Should the merger pass the vote, shares in Sorouh will be suspended from trading on June 23.
In banking news, the Emirates Banks Association is discussing proposed caps on mortgages with the United Arab Emirates' central bank. It proposed a cap of 75 and 80 percent respectively on lending on a first property to expatriates and UAE nationals.
Elsewhere, shares in Commercial Bank of Qatar may come under selling pressure after the lender, which is eyeing a majority stake in Turkey's Alternatifbank, posted a 19 percent jump in fourth-quarter net profit but trailed analysts' forecasts.
In Oman, telecom operator Nawras posted a 13.4 percent drop in fourth-quarter profit, a fourth consecutive quarterly decline.