Bourses rattled, but recover

Sensex, Nifty recoup on banking, realty rebound.

Indian bourses opened on an extremely weak note taking cues from the world markets on the back of the Dubai debt scare. The Dubai government-owned investment company — Dubai World — asked for a restructuring of its debt amounting to $59 billion out of the total $80 billion debt of the state.

The company was affected by the global credit crunch and recession. The debt fiasco hammered the realty, infrastructure and banking companies, which have exposure to the emirates.

In early trade, the Bombay Stock Exchange’s Sensex slipped to a low of 16,210.44 after opening at 16,718.80, down 508.36 points. The benchmark ended at 16,632, down 222.91 points, or 1.32 per cent, from its previous close. The index saw a recovery of 422 points from the day’s low.

The panic created by the Dubai market seemed to subside after the opening of the European bourses which led to a late recovery in the Indian market.

Asian stocks tumbled on Friday as shock waves from Dubai hit the region, shaking banking shares and boosting the yen to a fresh 14-year high against a weak dollar. The Hang Seng slumped 4.84 per cent, followed by the Seoul Composite Index (4.69 per cent), the Nikkei (3.22 per cent) and the Shanghai Composite Index (2.36 per cent).

The CNX Nifty settled at 4,941.75, down 63.80 points, or 1.27 per cent. The index recovered 135 points from the day’s low. Among the Sensex stocks, Jaiprakash Associates was the top dragger, down 3 per cent at Rs 214.50. Larsen & Toubro (2.71 per cent), Infosys (2.45 per cent), TCS (2.40 per cent) and Sterlite (2.13 per cent) were the other major losers.

ITC, HDFC, ICICI Bank, Reliance Industries and NTPC declined 1-2 per cent each.

Bharti Airtel, Hero Honda, Reliance Infrastructure, Grasim Industries and Tata Steel managed to recover and end in the positive zone.

The market breadth was very dismal. Out of 2,802 shares traded, 2,023 declined and 735 advanced on the BSE.

The BSE IT index was the prominent loser, down 2.20 per cent. It was followed by capital goods (1.82 per cent) and bank index (1.41 per cent).

The realty index, which was hammered badly following the news of the Dubai default, slipped to a low of 3,378.38, recovered 236 points from its low to end flat at 3,614, down 0.55 per cent.

The Bankex, which touched a low of 9,530.63, recovered 389 points to end the day at 9,920.29.

“The debt servicing problems surfacing in Dubai has sent jitters to the markets across Asia, Europe and back home, which were deep in red,” said Dinesh Thakkar, CMD, Angel Broking. Thakkar believes that the impact on bourses, especially in India, would be short-lived as the exposure of India and the Indian companies to Dubai is not significant.

Further, he points out the same is unlikely to deter inflows to the Indian bourses, an avenue of high growth and profitability for global investors.

Hence, he expects investors to use the opportunity provided from the knee-jerk reaction of the markets to enhance exposure to equities.