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Markets always bounce back after attacks
No one is betting on it because the current global financial tsunami has made inv...
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Association Of Indian Individual Investors Nov 28, 2008 Markets Always Bounce Back After Attacks

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“Of course, this only adds to the prevailing negative sentiments but it is to the credit of Indian investors that every terror attack in the past has only improved sentiments and markets are all about sentiments,” Jagannadham Thunuguntla, director of India’s fourth largest share brokerage house, the Delhi-based SMC Group, told IANS Thursday.

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Association Of Indian Individual Investors Nov 28, 2008 Markets Always Bounce Back After Attacks

  1. 1. Markets always bounce back after attacks No one is betting on it because the current global financial tsunami has made investors jittery, but if history is any indication, Indian investors have always fought back and pushed up markets every time terror has struck Mumbai, India’s financial capital, analysts said Thursday. Indian equities markets were kept closed Thursday, the morning after the terror attack, and analysts said the move would prevent any knee-jerk reaction, even as history shows markets have surged every time there has been a terror attack in Mumbai. “Of course, this only adds to the prevailing negative sentiments but it is to the credit of Indian investors that every terror attack in the past has only improved sentiments and markets are all about sentiments,” Jagannadham Thunuguntla, director of India’s fourth largest share brokerage house, the Delhi-based SMC Group, told IANS Thursday. “In the March 12, 1993 serial blasts, the Bombay Stock Exchange (BSE) itself was attacked but markets were closed only temporarily and ended higher than the previous day and even higher the next day,” Thunuguntla said. The BSE’s benchmark 30-share sensitive index (Sensex) March 11, 1993, closed at 2,330 points. On the day of the blast, March 12, a Friday, the Sensex closed at 2,361, up 31 points or up 1.33 percent. In the next trading session Monday, the Sensex closed at 2,421, up 60 points or 2.54 percent from its close Friday previous week.The equities markets reacted similarly after the next major terror attack - the serial blasts in Mumbai suburban trains July 11, 2006. The blast took place after markets had closed with the Sensex finishing that day at 10,614 points.The next day, July 12, the Sensex closed at 10,930 points, a gain of 316 points or 2.3 percent. “These attacks will certainly impact foreign pension and retirement funds such as Calpers as they want stable returns and low risk and now returns in India are low while risks have increased,” Thunuguntla said. “Similarly, many retail investors may think that now there is no certainty for their money nor for their lives,” Thunuguntla said. “But hedge funds like to play with risk so they may continue if they find returns in India are again improving,” Thunuguntla said, adding: “In any case terror events pan out in a day or two so that markets will continue to behave according to overall global and domestic economic and financial situation.”

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