Market may extend losses; Q2 GDP data eyed Q2

The market may extend recent losses as Dubai's debt problems could trigger investor risk aversion which in turn may slow down the flow of capital into emerging markets including India. Dubai said on Wednesday, 25 November 2009, it wanted creditors of Dubai World and property group Nakheel to agree a debt standstill as it restructures Dubai World, the conglomerate that spearheaded the emirate's breakneck growth. Dubai World had $59 billion in liabilities as of August.

Debt worries in Dubai sparked fears that the global financial markets have not healed properly since last year's crisis and that the Dubai problem could expose these weaknesses.

India and the United Arab Emirates (UAE), of which Dubai is a member, are separated by the Arabian Sea and closely linked by the millions of Indians who work in the region. Indians make up about 40% of the UAE's population, accounting for 10% to 12% of India's inward remittances, according to report by a foreign brokerage. But Finance Secretary Ashok Chawla said on Friday Dubai debt worries are unlikely to impact remittances from the region.

The UAE was the second-biggest export destination for India during the nine months through December 2008, accounting for $14.6 billion, or 11.15% of India's total - a share that has been rising and closing in on the United States. But Trade Minister Anand Sharma said India's economy is unlikely to be hard-hit by the situation in Dubai as India is a very large economy.

The Reserve Bank of India (RBI) governor Duvvri Subbarao on Friday 27 November 2009 said an assessment of the impact of Dubai's debt problems was needed before deciding on a response. India's financial integration with the global economy is deeper than its trade integration, the central bank governor said.

Many Indian companies were also quick to play down their exposure to Dubai on Friday, 27 November 2009. Engineering conglomerate Larsen & Toubro said it had exposure to Dubai of $20 million to $25 million. India's largest listed realty firm, DLF, and second ranked Unitech said they had no exposure to Dubai, and leading private bank ICICI Bank said it had no material exposure. While Indian banks are heavily focused on the domestic market, they are active in handling remittances from overseas workers. State-run Bank of Baroda has exposure of 7-8% of its loan book in the United Arab Emirates. Bank of Baroda said the assets are good performing assets

The government will announce Q2 September 2009 gross domestic product (GDP) data on Monday, 30 November 2009. The economy grew at 6.1% annual rate in the June 2009 quarter

Another data to watch out is Purchasing Managers' Index (PMI) for the month of November 2009. India's manufacturing activity expanded for the seventh consecutive month in October 2009, but at a slightly slower pace as growth in new orders and output slowed. The HSBC Markit Purchasing Managers' Index (PMI), based on a survey of 500 companies, fell to 54.5 in October 2009 from 55 in September 2009. A reading above 50 means activity expanded during the month

Auto, cement and steel stocks will be in focus as they announce November 2009 sales figures.