BSE benchmark Sensex tumbles over 540

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The Sensex, which had witnessed two big losses this month, tumbled 451.63 points to 16,403.30 points in the first ten minutes of trading and continued to fall around 540 points.

CJ: Mazhar Nawaz

Fri, Nov 27, 2009 12:58:31 IST

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THE BOMBAY Stock Exchange benchmark Sensex on Friday (November 27), tumbled over 540 points in early trade on hectic selling by funds in line with weak global cues and concerns over Dubai's debt.

The Sensex, which had witnessed two big losses this month, tumbled 451.63 points to 16,403.30 points in the first ten minutes of trading and continued to fall around 540 points.

Similarly, the wide-based National Stock Exchange index Nifty dropped by 140.50 points to 4865.05 points.

Brokers said the selling focus was more on banking and realty stocks after Dubai's debt problems revived concerns about the global financial system and rattled markets across Europe and Asia.

Brokers said the selling focus was more on banking and realty stocks after Dubai's debt problems revived concerns about the global financial system and rattled markets across Europe and Asia.

Dubai is shaking investor confidence across the Persian Gulf after it sought a six-month reprieve on debt payments that risked triggering the biggest sovereign default since Argentina in 2001. The move caused a drop on world markets on Thursday and raised questions about Dubai's reputation as a magnet for international investment.

Stocks, bonds and currencies fell across developing countries. The MSCI Emerging Markets Index of stocks dropped 1.1 per cent, led by declines in China and Russia.

The fallout came swiftly after Wednesday's statement that Dubai's main development engine, Dubai World, would ask creditors for a standstill on paying back its $60 billion debt until at least May. The company's real estate arm, Nakheel -- whose projects include the palm-shaped island in the Gulf -- shoulders the bulk of money due to banks, investment houses and outside development contractors.

Moodys Investors Service and Standard & Poor's cut the ratings on state companies yesterday, saying they may consider state-controlled Dubai World's plan to delay debt payments a default. The sheikhdom, ruled by Sheikh Mohammed Bin Rashid Al Maktoum, borrowed $80 billion in a four-year construction boom that reduced its reliance on falling oil supplies and created the region's tourism and financial hub.

``Dubai is the most indicative of the huge global liquidity boom and now in the aftermath there will be further defaults to come in emerging markets and globally,'' said Nick Chamie, head of emerging-market research at Toronto-based RBC Capital Markets.

“Our market was pulled down as global markets were in the red,” said Kunal Sukhani, manager of institutional equities, Asian Markets Securities. “Investors were unwinding their long positions in banking and metal stocks on expiry,” he said.

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