Mumbai serial blasts may dampen but not douse spirits

MUMBAI: The Bombay Stock Exchange will function normally on Wednesday despite the Mumbai train blasts of Tuesday. The NSE hadn’t decided at the time of going to press, but the chances are that it will function normally, too. However, pundits say that the markets may initially rule weak, especially since the confidence of foreign investors may have taken a knock.

A whiff of that came on Tuesday itself, when all 13 Indian companies listed on US stock exchanges declined sharply. The American Depository Receipts (ADRs) of VSNL had declined as much as 6.31% at10 pm IST. The ADRs of Rediff, MTNL, Infosys, Tata Motors, HDFC Bank and Cognizant Technologies were all down more than 3% at the same time.

“As the Indian market gets more and more internationalised, local events like these may not affect it over the long term. But when foreign investors are just building up confidence levels in India, these blasts take us two steps backward. For anyone to park money in India, the first thing they look for is peace and security. Fundamentals come after that,” says AK Sridhar, chief investment officer of UTI Mutual Fund.

Daily combined average turnover on the BSE and NSE, which has averaged just Rs 7,953 crore, may remain low on Wednesday as well as confidence levels have been dealt a blow. Upbeat expectations of the results to be declared by Infosys on Wednesday may also be watered down. “There would be a bit of nervousness, but we don’t know how the markets are going to react,” says Srinivasan Varadarajan, managing director of JP Morgan.

Vallabh Bhanshali, chairman of Enam Financial Consultants, says that “there is always the possibility of a knee-jerk reaction. But this country doesn’t get affected by things like this. Rather, people would support the markets and not run away in a situation like this.”

Whenever the country has witnessed blasts like these earlier, more often than not the markets have bounced back rather quickly. Says Sanjay Sinha, head of equity at SBI Mutual Fund: “It’s a very tragic thing that has happened, but we may not see much of an impact on the markets, as we have witnessed in the past.”

Adds Narayan S A, managing director of Kotak Securities, “It’s sad that something like this has happened in the city again. As far as the markets are concerned, I don’t see any kind of reaction - since the economy as such has not been crippled.”