Sensex rebounds after sharp losses, still down by 223 points

Reacting cautiously to Dubai debt crisis, markets today recovered from day's steep losses but still ended lower by over 220 points, with investors and economists and all foreseeing India perhaps gaining on the latest unravelling in the financial world.

Continuing its overnight sharp losses, the Bombay Stock Exchange benchmark Sensex opened lower and in a knee-jerk reaction to Dubai debt repayment crisis further posted a sharp over 600-point losses on aggressive selling, primarily in realty and banking counters.

However, the trend was quickly reversed after the government said the crisis should not have any major impact on factors like employment and exports, which boosted the investor confidence. The Reserve Bank also said developments and the extent of the problem need to be studied which also boosted the confidence.

Marketmen said the impact of Dubai crisis on bourses, especially in India, would be short-lived as the exposure of the India and Indian corporate to Dubai is not significant. "It is unlikely to deter the liquidity flows towards the Indian bourses, which provides the global investors an exposure to the high growth and profitability destination.

Hence investors should use the opportunity provided from the knee-jerk reaction of the markets to enhance exposure to equities," said Angel Broking CMD Dinesh Thakkar. The finance ministry said the financial crisis in Dubai may not impact remittances sent by Indian expatriates in the Gulf, helping reversing the trend.

Brokers said buying by domestic funds, led by Life Insurance Corporation at the end of the session, mainly arrested further fall. The Bombay Stock Exchange 30-share Sensex finally settled the day at at 16,632.01, netting a fall of 222.92 points or 1.32 per cent from its previous close.

Bourses across the world plummeted yesterday on Dubai World, a state-run company seeking extension of time for repaying $59 billion to creditors. Asian stocks extended losses as the latest concern has triggered worries about the health of global financial system.

Key benchmark indices in China, Hong Kong, Singapore, Japan, South Korea and Taiwan ended sharply lower by between 1.10 per cent to 4.84 per cent. The broader 50-share Nifty of the National Stock Exchange dropped further by 63.80 points or 1.27 per cent to close at 4,941.75 from its last close.