Bomb blast will not affect Indian stock market but Global cues will

Business

oi-Shoaib MD

By Shoaib Md

Published: Thursday, July 14, 2011, 9:46 [IST]

The Indian stock market opened in the negative territory but it was not necessarily because of yesterday's blastbut rather because of a combination of reasons like US rating, performance of Asian peers.

Three deadly blast rocked the crowded parts of Mumbai on Wednesday evening. Reports suggests at least 21 people have died and it is the biggest militant attack on the country's financial capital since 2008.

Also most of the Asian markets closed down on losses after Moody's warned that United States could lose its top-notch credit rating over the few weeks.

Reuters quoted Ambareesh Baliga, chief operating officer at Way2Wealth Securities, "We could see the market opening a bit weaker but that will be more due to global cues".

He further added that the blast will not have a major impact on the market and this has been witnessed in the past as well.

Seth Freeman, chief executive officer at EM Capital Management LLC in San Francisco, resonated similar opinion on Bloomberg. He said ''The market was very resilient after 26/11,"" referring to the Nov. 26, 2008 attack. ''The immediate reaction should be moderate as such events have occurred in the past. It shouldn"t affect anyone"s long-term view on India."

Then he further added that it could have a slightly severe impact in case if it was an international terrorist group. Some foreign investors may even question the domestic stability and raise the issue of terrorism as a risk of investing in India and other emerging market.

View: On such occasions, security stocks should be monitored closely. There could be a surge in demand for electronic surveillance equipments and other secuity equipments rise. And momentum investors will jump on this ship.

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