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Mumbai exchanges volatile after bomb blasts | |
(about 4 hours later) | |
Shares in Mumbai have rebounded from early losses that followed the series of bomb blasts in the city on Wednesday evening. | |
The Mumbai Stock Exchange's Sensex index rose 0.6%, while the National Stock Exchange's Nifty index was up 0.7% during midday trading. | |
The two indexes had fallen initially by as much as 6% after the markets opened. | |
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%. |
Investment concerns | |
The blasts come at a time when foreign investment in India has been under pressure. | |
There were concerns that security issues 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. | 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. | The Sensex index has fallen 10% since the start of this year, making it one of the worst performers among Asian stock markets. |
However, analysts said that the attacks were unlikely to deter investors away from the country. | |
"India has shown the ability to bounce back from such events," said Jyotivardhan Jaipuria of Bank of America Merrill Lynch. | |
"It is not going to have any long-term impact on the investment flows into India," he added. | |
Long-term growth | Long-term growth |
Analysts said that 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. | 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. | 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. | 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. | 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 Arjuna Mahendran of HSBC Private Bank. | |
"Everybody out there wants to buy India; the Indian growth story is still intact." he added. |