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Old 11-27-2009, 07:16 PM
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Default Mkts singe in Dubai crisis, end down despite smart recovery

Dubai's debt crisis has put Indian equities as well as global markets on fire since yesterday. The crack across the globe emerged when Emirate said two of its flagship firms Dubai World & Nakheel planned to delay repayment of billions of dollars in debt. The markets feared that this debt default could affect other countries as they are trying to recover from global meltdown.


But the benchmark indices as well as European shares discounted most of the news, due to which Indian equities recovered more than 2/3rd of their losses in the last couple of hours, led by buying from insurance companies. The Nifty closed the day above 4,900 level while the Sen*** above the 16,600 level.


All markets across the globe started sinking yesterday when Dubai's government said it would ask creditors of Dubai World, the conglomerate behind its rapid expansion, and Nakheel, builder of its palm-shaped islands, to agree a standstill on billions of dollars of debt as a first step towards restructuring. Dubai World has USD 59 billion of liabilities, representing a large part of Dubai's total debt of USD 80 billion.
Asian markets did not react too badly yesterday to the Dubai's debt crisis news. These markets crashed today. Hang Seng plunged 4.8% and Kospi was down 4.7%. Nikkei and Taiwan Weighted fell 3.2% each. Shanghai and Jakarta were down 2.4-2.8%. European markets were flat at the time of writing this report, as they had reacted to the news on Thursday with fall of over 3%. US futures were down over 2%, as US markets closed on Thursday on thanksgiving note.


Index
Closing Value
*Chg (%)
**Chg (%)
REALTY
3,614.10
-0.55
-6.34
IT
4,659.53
-2.2
-3.79
TECk
2,951.79
-1.63
-3.29
BANKEX
9,920.29
-1.41
-3.25
POWER
2,948.53
-0.73
-2.41
MIDCAP
6,312.76
-1.35
-2.36
METAL
15,717.01
-1.3
-2.35
SEN***
16,632.01
-1.32
-2.29
CAP GOODS
13,117.92
-1.82
-2.26
NIFTY
4941.75
-1.27
-2.19
SMALLCAP
7,369.37
-2.14
-2.1
OIL&GAS
10,121.23
-1.06
-0.49
FMCG
2,851.35
-1.2
-0.09
AUTO
6,944.29
-0.41
0.3
PHARMA
4,726.51
0.08
0.9
* - Today's Change
** - Weekly Change
The 30-share BSE Sen*** recovered 421.57 points, before closing at 16,632.01, down 222.92 points or 1.32%. The 50-share NSE Nifty fell 63.80 points or 1.27%, to settle at 4,941.75, after seeing recovery of 135.05 points from day's low.



This fall of over 200 points was on account of sell-off in banking, capital goods, technology, auto, FMCG and oil & gas exploration companiesí shares. However, buying in Bharti, Ranbxy, Suzlon, Unitech, BPCL, Cipla, Reliance Infrastructure, Hero Honda and Tata Steel helped the markets in recovery to some extent.


Suzlon Energy shot up over 6%, as the company's arm REpower received order for up to 954 MW. Ranbaxy was up over 3%, as it has launched Valaciclovir Tablets in US. Unitech has gained over 2.5%, as the management said the company has no exposure to Dubai.


BPCL jumped 1.8%, as crude slipped below $ 75 a barrel, down $ 3.67 from its previous close on the NYMEX. Gold also tanked 2.67%, to $ 1,160.99 an ounce.
Istithmar an investment arm of Dubai World holds nearly 13% stake in SpiceJet, which declined 4.44%.


India infrastructure companies especially having exposure to the Dubai economy and its once booming real estate business saw selling pressure. HDIL, Indiabulls Real Estate, Bank of Baroda, Nagarjuna Construction, Omaxe, Punj Lloyd, DLF, Larsen & Toubro, Voltas and Aban Offshore were down 1-6%.
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