How much damage is Dubai Debt going to do to Indian Stock Markets??
I have not been actively following the Indian Stock Markets for sometime due to time constraints.But, i get my dose of interesting and necessary news on the markets via twitter . I was in for a surprise when i saw a lot of tweets mentioning that , “Sensex opens 300 points down” , “markets on a downtrend” with some more tweets following with “Sensex down by more than 600 points”.
Now, that was a surprise.Markets have been relatively stable for sometime and this sudden negative movement must have had a reason to it.The reason i found out via the tweets was,
Dubai’s debt default shakes world
Dubai’s state-owned holding firms shocked the financial world with a debt default request.Just when the financial world was showing signs of a recovery, this news shocked the markets world over and led to worries of another financial crisis on the anvil.
As per the HT article,
Dubai World, saddled with a $59 billion (Rs 2,74,350 crore) debt, on Wednesday asked creditors to defer payments for six months. Its subsidiaries include Nakheel, the construction firm famous for making country-shaped islands, and DP World, owners of five port terminals in India.
A lot of European and asian banks have investments in Dubai and a negative effect was evident.
The UAE became India’s number one export destination in 2008-9, buying $24 billion worth of ‘made in India’ products. It sends home $ 2 billion (Rs 9,300 crore) in annual remittances.
The Indian Markets however recovered smartly at the end of the day with markets closing down by 200 odd points.
But,the question i have is,
Was today’s fall a knee jerk reaction or Dubai’s debt poses a real long term threat.
I am not aware of the kind of exposure that both the economies have with each other, but if it is a short term thing, I will love to enter the markets and initiate some fresh buying.
What do you think? Is Dubai’s debt an opportunity in tragedy or it is best to stay out of the market till the dust settles down.
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Tags: economy, Equity, International News, Stock Markets
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