4/5 times markets have rebounded

Sensex has mostly closed up defying attacks on Mumbai

MUMBAI: Indian markets have historically emerged stronger after every terror attack on Mumbai, the country’s financial capital.

Five major incidents of terror have taken place in and around the city over the last 15 years.

The markets have shown an upside after four of these.

On March 12, 1993, the city was shaken by serial blasts of a kind not seen before. On March 15, when the market reopened for trading, the Bombay Stock Exchange’s Sensitive Index ended up by 2.55%, or 60 points.

On August 25, 2003, there were two taxi blasts in the morning. The Sensex shed 2.92% or 120 points on that day, but rebounded by 148 points (3.69%) the next day.

It was the same after the serial train blasts on July 11, 2006, now referred to as 7/11. The Sensex gained 315 points, or 2.97%, the next day.

Even on September 8, 2006, the day the Malegaon blasts occurred, threatening a communal flare-up in the city, the BSE barometer closed up 0.55%, or 64.80 points.

The sole exception to this otherwise resilient show was the blast in a BEST bus at Ghatkopar on December 2, 2002. The Sensex closed lower by 1.23%, or 40 points, the following day.

Talk about Maximum City’s tendency to spring back into normalcy with a vengeance after every crisis.

The Street is hoping that diehard stubbornness would be on show this time, too. The index futures traded in Singapore, which fell nearly 5% intraday on Thursday, recovered part of the losses at close, ending down 2.35%.

Markets in India remained closed on Thursday. Sebi will decide on Friday morning on whether to resume trading, sources said.

Nandan Chakraborty, head-research at Enam Securities, also made light of any knee-jerk reaction. “Look at the reaction that is seen in the immediate period after such an incident from a historic perspective. Ignoring the long term, even the medium term of around six months after such incidents have shown little correlation to it. Six months after major terror attacks, you will see little correlation to the immediate reaction with the market movement.”

For all that, some rule out a bounce on Friday, while conceding that a major slide is also unlikely.

Saurabh Mukherjea, head of Indian equities at Noble, said, “It is tough to envision a bounce in this scenario. This kind of attack seems likely to undermine investor sentiment. The sheer practicality of coming here to assess investments would be dented.”

But even a downtrend could have a positive side, says Mukherjea. “The silver lining could be that much of the negative sentiment that has been floating around because of the expected bad third quarter results could crystallise, leading to the formation of an earlier bottom. As the bottoming out becomes more eminent, analysts might find it easier to pitch the India story to investors.”

sachin_m@dnaindia.net