Mumbai stock markets slide on open after deadly blasts

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 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%.

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.

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.
Long-term growth

However, HSBC's Mr Mahendran said that any negative impact on the stock markets is likely to be short-term.
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Everybody out there wants to buy India, the Indian growth story is still intact”
Arjuna Mahendran
HSBC Private Bank

"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.

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.

"Everybody out there wants to buy India; the Indian growth story is still intact."