PTI

A guest of Taj hotel comes out in Mumbai on Thursday.

India has seen it all in last two decades and not budged an inch. Despite the intensity of it, things seem to be no different this time as well.
Not many believe that foreign investors would take a relook at “destination India.” Foreign investments into Indian companies would flow unabated despite what has happened, feels Carlyle India managing director Rajeev Gupta.
“We are not immobilised. The issue is almost sorted out in 24 hours. Things like these are common nowadays and it is only a matter of how the country deals with it. If I were a foreign investor, I would be impressed by the way the forces have handled the situation,” said Gupta.
The terrorist attack in Mumbai since Wednesday night may be aimed at breaking the financial backbone of the country, but their attempts could once again meet with failure before a city that has time and again vehemently refused to be brought down to its knees.
It’s definitely going to impact investments coming from abroad
“People are now fed up of terrorism and will take it in their stride. I do not think it will have any substantial negative impact on the markets,” said Nimesh Kampani, chairman, JM Financial Group.
So, how are the equity markets expected to react to this?
Back in March 1993, the Bombay Stock Exchange (BSE) barometer index, the Sensex, reacted to the first major incident of terror in the city, by firming up by a modest 2.5 per cent the very next day, say market analysts.
Despite attacks of similar magnitude, foreign investors’ interest in the country’s equity markets has only grown manifold during the last 15 years, while the Sensex has more or less kept up the trend of a bounce back sooner than later.
“I do not think it will have any substantial effect on foreign investors’ appetite. After all equity markets are a simple function of fundamental valuation,” said Kampani.
Terrorists, in most possibilities, will once again fail to destroy investor confidence, feel experts.
“This has happened before and the foreign institutional investors are aware that this is a part of the risk they undertake for being in India,” said Naresh Kothari, president, Edelweiss Capital.
However, with the global economy undergoing a phenomenal slowdown, the latest terrorist strike that lasted for more than 20 hours could cause a knee-jerk reaction in the equity markets. But that is expected to be a short-term phenomenon and things would return to normal in the due course of time.
“This can have some short-term impact given the current state of the markets. But eventually, investment interest will come back as long as economic fundamentals remain strong,” said Kothari.
Following global cues, domestic equities have been under a dry spell since January this year. The Sensex is now 56 per cent lower from the record closing high of 20,873.33 points on January 8, 2008.
According to the India head of a top American financial services company, there will definitely be an impact on foreign investments on the immediate term. “People might pose a brave face, but there is panic all-around,” he said.
Most foreign companies are however, tight-lipped on the way they look at India as a market. Most expat CEOs whom Financial Chronicle spoke to said they were unwilling to comment on the issue. Ford India president and MD Michael Boneham said, “I do not want to make any comment on the likely impact of the attack on the investment climate in the country.”