Chidambaram says blasts not likely to impact markets for long

Udaipur (Rajasthan), Nov 28 : Finance Minister P. Chidambaram on Friday said that the Indian markets are capable of withstanding the effect of the coordinated militant attacks in Mumbai.

Chidambaram's statement in Udiapur came even as the commandos were still battling heavily armed militants holed up in Mumbai's luxury hotels along with hostages for more than 40 hours.

Chidambaram said that India continues to be an attractive investment destination and it would be able to convince the investors.

"The immediate aftermath of a tragedy like this, of a terrorist attack like this, will be that investors sentiments will be affected. But within a few weeks or months it will recover. People who have large investment in this country will continue to keep that investment here. And we will be able to convince the investor world over that despite what happened in Mumbai on Thursday. India remains by and large an attractive investment destination," said Chidambaram.

Meanwhile, the Bombay Stock Exchange (BSE)'s, Sensitive index (Sensex) after fall in initial trading on Friday went up by 107 points to touch 9,136 in the afternoon.

But shares in Indian Hotels Co Limited fell 13.5 per cent to 41.90 rupees and EIH Ltd was down 4.6 per cent at 88.60 rupees after their main hotels - Taj Mahal Hotel and Oberoi-Trident were damaged in the attacks.

The BSE was shut on Thursday after the militant attacks at several places in the financial capital killing at least 121 people rattling investors.

Experts maintained that the market is driven more by the global economic meltdown and not as much as by the attacks.

"As far as day before Wednesday's night attacks are concerned, well it did have some negative impact on the market but I don't think it will last because basically markets will go by the numbers and economy. I mean it works on economy and business (by and large)," said Sunil Shah, a stock market analyst.

Traders said short covering ahead of the expiry of monthly derivatives and better-than-expected economic growth in the September quarter helped the market to pull back, but the outlook for the near term was weighed down by greater political risks.

Analysts say Mumbai is no stranger to political violence and markets have usually regarded previous bombings and other attacks with a degree of nonchalance.

Wednesday's attacks though will put an additional strain on nerves frayed by global financial turmoil and a tide of cash pouring out of Indian assets.

ANI