Global markets melt on Dubai default

The rescheduling of $59 billion debt payment by Dubai World – Dubai’s state-owned holding firm has sent global markets into a tailspin. The Dubai-based firm has asked creditors to defer payments for a period of six months.

Its portfolio comprises DP World, one of the largest marine terminal operators in the world, Economic Zones World which operates several free zones around the world including Jafza and TechnoPark in Dubai and Nakheel - the property developer behind projects such as The Palm Islands.

"As a knee-jerk reaction, we may see some money moving out of India, especially in leveraged sectors," says Anand Tandon, Director Equities, BRICS Securities.

"Dubai debt issue could have a cascading impact as more clarity sets in," states India Infoline research.

The Asian markets have seen losses in the range of 2-3%. The Shanghai Composite is down 33 points at 3,138. The Hang Seng has plunged 3.3% to 21,477, down 734 points. The Nikkei is down 2% (182 points) at 9,201.

The Seoul Composite has shed 3% at 1,552. The Straits Times has declined 31 points to 2,762, and the Taiwan Weighted index is down 173 points at 7,567.

The European markets, too, felt the Dubai heat. The FTSE 100 crashed 3.2% (171 points) to 5,194. The CAC 40 shed 3.4% at 3,679, and the DAX was down 3.3% at 5,614.

The US markets, however, were closed yesterday due to 'Thanksgiving Holiday'.

Meanwhile, Indian markets, the Sensex and the Nifty too have opened significantly lower tracking cues from the Asian and world markets.

The Sensex tumbled to a low of 16,403 in early trades, and is now down 2.4% (398 points) at 16,457. The Nifty is down 128 points at 4,879.

Realty, metal and banking shares are the prime draggers.

DLF has tumbled 6% to Rs 333. ICICI Bank has plunged 4.8% to Rs 624. Larsen & Toubro also has shed 5% at Rs 1,549.
Sterlite and Jaiprakash Associates have cracked around 4% each to Rs 812 and Rs 213, respectively.

Hindalco and Maruti have slipped 3.5% each to Rs 129 and Rs 1,527, respectively.

Tata Steel has dropped over 3% to Rs 526. Reliance Infrastructure and SBI are down 2.8% each at Rs 1,006 and Rs 2,191, respectively.

Reliance is down 2.5% at Rs 1,038.

Sun Pharma, however, is up 1% at Rs 1,478.