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Investors remain upbeat despite blasts
By agencies
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Tuesday, 01 November 2005, 20:30 IST
MUMBAI: India's financial markets looked beyond fatal bomb blasts at the weekend, with stocks rising as investors judged that prospects for one of the world's fastest growing economies were not in jeopardy.
The partially convertible rupee initially slipped against the dollar on nervousness that the New Delhi blasts, which killed at least 59 people, might send foreign investors scurrying to convert their rupees into dollars and quit the country.
But the main BSE stock index, which shed 3.6 percent in two days last week, climbed 2 percent as investors decided the sell-off had gone too far and, awful as the attacks were, they would not impact consumer spending or company performances.
The BSE index closed 2.7 percent higher at 7,892.32 points, while the rupee stood at 45.09 per dollar, only slightly below Friday's close. Bonds were flat as the market awaited details of a federal bond sale due over the coming week.
India's $700-billion economy clocked up an annual growth rate of 8.1 percent in the April-June quarter this year and is forecast to expand 7.0-7.5 percent over the whole of 2005/06.
Foreigners eyeing that growth rate have been key drivers of the stock market this year, investing a net $8.5 billion in Indian shares until September and sending the main index up more than 30 percent to record highs.
Since September, as valuations looked high, they have sold more than $700 million and the market has undergone a correction. But analysts say foreign investment is unlikely to dry up as a result of the attacks.