INDIAN MARKETS END-SESSION

(Sensex slides 3.4% in two days on Dubai debt problems)
Key benchmark indices staged a strong comeback in second half of the day's trading session after suffering a severe setback in the first half. A recovery in European stocks from an initial slide and news that China has pledged to stick with a pro-growth stance in 2010, aided the recovery. The BSE 30-share Sensex lost 222.92 points or 1.32%, up 421.57 points from the day's low and off 86.97 points from the day's high.

The barometer index has lost 566.94 points or 3.41% in the past two trading sessions on worries about Dubai's debt problems. 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.

Trading in US index futures showed the Dow could fall 203 points the opening bell today, 27 November 2009. At one point of time, the Dow futures were down more than 300 points. US financial markets were closed on Thursday, 26 November 2009, for the Thanksgiving holiday.

Index heavyweights Reliance Industries, ICICI Bank and Bharati Airtel played lead role in the strong intraday recovery on the domestic bourses today. Auto, banking and infrastructure shares rebounded from early lows. But the market breadth was weak.

Intraday volatility was high. The market cut losses after a sharp setback in early trade. However, the intraday rebound proved short-lived. The market weakened again later. Fresh selling pulled the market to fresh intraday low later. The market staged a solid intraday rebound in mid-afternoon trade.

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 2009.

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. Meanwhile, total exports from India fell 6.6% in October 2009 over the previous year, Sharma said today.

The Reserve Bank of India (RBI) governor D 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 (BoB) has exposure of 7-8% of its loan book in the United Arab Emirates. BoB said the assets are good performing assets