From C. Kutumba Rao - Nov 30, 2009
Rattled by Dubai's debt crisis, stock markets slumped on fears that although the major central banks have stabilised the financial system, some of the 'excesses' simply refuse to disappear and may disrupt the system again. Erasing most gains of three-week rally, the benchmark indices fell by more than two per cent during the week ended. On the BSE, the Sensex fell by 390 points to end at 16,632 and the Nifty on the NSE shed 110 points to close at 4,942. However, the bounce back from intra-day lows on Friday reflects the bullish undertone and resilience of the markets. Fears over tax on capital inflows and withdrawal of stimulus packages have been allayed by the finance minister, but the impact of rising food inflation is a cause of concern. Dubai's effort to reschedule its debt is a sign that government spending alone won't be enough to protect markets. Differentiation between riskier and less risky asset classes in which correlatio-ns have risen, maki