Market ends weak on Dubai World debt concerns

The markets were shattered due to Dubai debt crisis fears today. Aggressive selling was seen in funds as well as sectors namely, realty, banking and metals stocks were hammered badly during the after noon trade.

The index tumbled over 500 points in the opening trade in reaction to Dubai`s debt rescheduling which hurt investor sentiment worldwide and witnessed a steep fall later touching a low of 16,210.44. However, the index shed most of its losses and recovered from day`s low to finally close on weak note.

Dubai had accumulated USD 80 billion of debt by expanding in banking, real estate and transportation. S&P had placed the ratings of four Dubai-based banks on negative outlook due to their exposure to Dubai World.

BSE Midcap and Smallcap index declined 1.35% and 2.14% respectively.

Asian stocks slumped, dragging the MSCI Asia Pacific Index down the most in eight months, on concern over losses stemming from Dubai`s attempt to reschedule its debt and as the yen strengthened against the dollar. HSBC Holdings and Standard Chartered sank more than 7% in Hong Kong as CLSA Asia-Pacific Markets said Dubai World`s potential default has `negative implications` for the banks.

Japanese benchmark index Nikkei 225 fell 301.72 points, or 3.22%, to end at 9,081.52. Hong Kong`s Hang Seng is declined 1,075.91 points, or 4.84%, to end at 21,134.50. China`s Shanghai Composite decreased 74.72 points, or 2.36 to end at 3,096.26.

The Sensex ended the day with a loss of 222.92 points, or 1.32% at 16,632.01 after touching a high of 16,718.80 and a low of 16,210.44. The broad-based NSE Nifty fell 63.80 points, or 1.27% at 4,941.75 after hitting a high of 5,005.05 and a low of 4,806.70.

Major gainers in the 30-share index were Bharti Airtel (0.94%), Reliance Capital (0.59%), Hero Honda Motors (0.53%), Reliance Infrastructure (0.43%), Grasim Industries (0.30%), and Tata Steel (0.27%).

On the other hand, Jaiprakash Associates 3.05%), Larsen & Toubro (2.71%), Infosys Technologies (2.45%), Tata Consultancy (Services (2.40%), Sterlite Industries (India) (2.13%), and ITC (1.88%) were the major losers in the Sensex.

Overall market breadth was sharply negative. Out of the total 2,802 stocks traded at BSE, 734 advanced, 2,023 declined while 45 remained unchanged.

Among the sectoral indices, BSE IT fell 2.2%, Capital Goods fell 1.82%, TECk went down 1.63%, Bankex dropped 1.41% and Metal lost 1.30%, while BSE HC which went up 0.08%, Consumer Durables rose 0.35%.

In an exclusive talk with Myiris.com, Ashok Jainani, vice president Head Research, Khandwala Securities commenting on the Dubai debacle said, ``The stock market reaction to debt rescheduling sought by Dubai World does not seem warranted. Global market capitalization loss is many times over the total debt that is being sought to be rescheduled. We do not believe there is any default cascading to other sectors of the Indian economy as is being made out by mainline media.``.

``Market was looking for a reason to pause and rest. This incidence has just provided that. We suggest adding long positions in growth stocks in this panic situation,`` he added.