Sensex plunges over 400 pts; banks, realty worst hit

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At 11:17 hours IST, the markets remained under pressure for the second straight day on concerns about Dubai's debt restructuring plan. Banking and realty stocks took heavy knock today followed by metal, oil & gas and capital goods stocks. Shares of companies, which have exposure to Dubai crashed in the early trade.

On the global front Asian markets slipped further, as Dubai-government owned Dubai World with USD 60 billion liabilities will seek a six-month standstill on its debts with all lenders. Dubai accumulated USD 80 billion of debt by expanding in banking, real estate and transportation. Dubai's sovereign CDS surged 111bps to 429bps.

The S&P had placed the ratings of four Dubai-based banks on negative outlook due to their exposure to Dubai World. Istithmar an arm of Dubai World holds nearly 13% stake in SpiceJet, which fell nearly 7%.

Among the Asian markets, Hang Seng and Kospi lost 3.4% each. Taiwan Weighted and Jakarta tanked 2.8% each. Shanghai and Nikkei were down 1.8-2.3%.

The Nifty tanked 130 points to 4,875 and the Sensex fell 429 points to 16,425. The BSE Midcap and Smallcap indices declined 2.5% each. All sectoral indices were down 2-5.7%.

BSE Realty index was the biggest loser down more than 6.5%. Metal, banks and capital goods were down 4% each. All BSE sectoral indices were trading in red.

L&T, Bank of Baroda, Voltas and Mundra Port, which have exposure to Dubai, fell 2.5-3.7%.

The management of Band of Baroda said the company didn't see any impact from Dubai situation, as there was no significant exposure to Dubai real estate. "Real estate forms 5-6% of Dubai portfolio"

R Shankar Raman, Exec VP Finance at L&T said that the company had exposure in multiple segments in Middle East. The company had exposure in hydro power segment. The company's exposure in Middle East over the last 2 years was to the tune of $ 200 million, he added.

YD Murthy, Exec VP-Finance of Nagarjuna Constructions said that due to the meltdown in Dubai real estate project, the company was going slowly on 440 apartment project in Dubai. The company required additional funding of Rs 100 crore to continue development, and the company was talking to banks for funding. "Currently we have two infra projects in Dubai and Abu Dhabi"

Realty stocks like HDIL, Omaxe, DLF, Parsvnath, Indiabulls Real and Unitech were down 4.5-6.6%, despite the comments from realty majors. The BSE Realty Index fell 5.7%.

All the banking stocks were down. Kotak Mahindra, Axis Bank, PNB, ICICI Bank, SBI and HDFC Bank slipped 2.4-3.8%. Bankex lost 3.5%.

Cement prices were hiked by Rs 5-15/bag. Pune cement prices hiked by Rs 10-15/bag and Mumbai cement prices hiked by Rs 5-7/bag. Delhi & Bangalore cement prices are set to increase.

Cement Stockists' & Dealers' Association president, Sanjay Ladiwala said cement prices were hiked in South, West India. "North will follow suit and prices set to increase."

However, Bharti Airtel, Ranbaxy Labs and Cipla were the gainers. Ranbaxy Labs was up over 2%, as it launched Valaciclovir Tablets in US.

Suzlon Energy was up just 0.3%, as its arm REpower won order for upto 954 MWs.

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