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Mumbai stock markets slide on open after deadly blasts | Mumbai stock markets slide on open after deadly blasts |
(40 minutes later) | |
Mumbai shares dip in early trading after a series of bomb blasts hit the city on Wednesday evening. | Mumbai shares dip in early trading after a series of bomb blasts hit the city on Wednesday evening. |
The Mumbai Stock Exchange's Sensex index fell 0.5%, while the National Stock Exchange's Nifty index shed 0.4%. | The Mumbai Stock Exchange's Sensex index fell 0.5%, while the National Stock Exchange's Nifty index shed 0.4%. |
The blasts come at a time when foreign investment in India has been under pressure. | The blasts come at a time when foreign investment in India has been under pressure. |
The last time the city experienced a similar attack in November 2008, stocks fell by almost 2%. | The last time the city experienced a similar attack in November 2008, stocks fell by almost 2%. |
Analysts said that security concerns may provide investors with a reason to reduce their holdings in markets that are seen as being more risky in the short-term. | Analysts said that security concerns may provide investors with a reason to reduce their holdings in markets that are seen as being more risky in the short-term. |
Global risk appetite has been diminishing in recent months amid fears over the economic problems in the US and the debt crisis in Europe. | Global risk appetite has been diminishing in recent months amid fears over the economic problems in the US and the debt crisis in Europe. |
India has also been hurt by the country's high rate of inflation, which has been eroding the value of assets. | |
The Sensex index has fallen 10% since the start of this year, making it one of the worst performers among Asian stock markets. | |
"Some retailers may become nervous and close their long-term positions," said Arjuna Mahendran of HSBC Private Bank. | "Some retailers may become nervous and close their long-term positions," said Arjuna Mahendran of HSBC Private Bank. |
Long-term growth | Long-term growth |
However, HSBC's Mr Mahendran said that any negative impact on the stock markets is likely to be short-term. | |
"I think markets should snap back very fast, people have been through this before," he explained. | |
Despite the blasts, the longer-term view is that India offers too much in terms of economic growth and domestic expansion for investors to remain wary. | Despite the blasts, the longer-term view is that India offers too much in terms of economic growth and domestic expansion for investors to remain wary. |
India has been one of the fastest growing economies in the region over the past few years, and it is expected to grow by close to 8% this year. | |
While India has been expanding, developed economies such as the US and Europe are still struggling to fully recover from the effects of the global financial crisis. | |
They have also been hit by newer developments such as the debt issues in the eurozone. | |
Analysts said that given those issues, India remained an attractive investment destination, even taking into account its domestic problems and the bomb blasts. | |
"Emerging markets are looking much better than developed markets given all the problems we have had in Europe and even the US," said HSBC's Mr Mahendran. | "Emerging markets are looking much better than developed markets given all the problems we have had in Europe and even the US," said HSBC's Mr Mahendran. |
"Everybody out there wants to buy India; the Indian growth story is still intact." | "Everybody out there wants to buy India; the Indian growth story is still intact." |