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Economy will withstand terror strikes: analysts

The terror strike may have rocked Mumbai, but analysts said the fundamentals of the economy were strong enough to withstand such incidents, although certain industries could be hit in the short-term, reports HT Correspondent.

business Updated: Nov 28, 2008 21:11 IST
HT Correspondent

The terror strike may have rocked the country’s financial capital, but analysts said the fundamentals of the economy were strong enough to withstand such incidents, although certain industries could be hit in the short-term.

“We do not see any long-term impact of the terrorist attacks on the economy or the capital markets though some weakness is likely in the near-term,” said Naresh Kothari of brokerage and research firm Edelweiss.

The immediate impact of past terrorist attacks on equity markets has not been significant. The indices have fallen less than 0.75 per cent in most instances.

Sovereign rating and research firm Standard & Poor’s has indicated that these attacks by themselves would not have any impact on ratings, while Moody’s has echoed a similar sentiment.

“Based on our current assessment, the negative effects of the current attacks on tourism, investor confidence, rupee and equities will probably turn out to be temporary,” said Rajeev Malik of Macquire Securities.

Analysts, however, said foreign investors would be worried about the safety of their employees and their establishments. “A soft approach by the government will only further dent foreign confidence, which in turn could hit the flow of foreign direct investment into the country,” said Malik.