UpdateMumbai attacks hit business confidence

27 November 2008 11:13  [Source: ICIS news]

By Pearl Bantillo and Mahua Chakravarty

SINGAPORE (ICIS news)--Indian business confidence has suffered a serious blow following late Wednesday's co-ordinated terrorist attacks in the country’s commercial capital Mumbai, market commentators said on Thursday.

At 16:30 local time (11:00 GMT), crossfire continued between government troops and suspected Muslim terrorists at the Oberoi hotel, where hostages were still trapped inside, although some hostages had reportedly been released from the Taj hotel.

Explosions were heard at both hotels, according to media reports.

The terrorist violence in Mumbai, which have left more than 100 people dead, including foreign nationals, and hundreds others injured, might also hit the tourism industry as foreign nationals - especially Americans and Britons - were targeted.

“The psychological impact of an attack in Mumbai is big,” said Malini Hariharan, ICIS bureau chief in Mumbai and author of the India chemicals blog.

The Bombay Stock Exchange and the National Stock Exchange decided not to open for business, citing the “prevailing abnormal situation”, with analysts saying the indexes and the rupee could have been hit if the markets had opened.

The attacks occurred at a time when India was expecting growth to slow because of the global financial crisis.

The fresh spate of violence in India might also be detrimental to the ruling United Progressive Alliance (UPA) coalition in next year’s national elections.

“The current government has not had much success in controlling terrorist activity - besides Mumbai, we have had attacks in almost every corner of the country,” said Hariharan.

Opinions varied as to when the shock would subside. “It is a little early to say. A lot will depend on how quickly the governmnet can get the situation under control and what steps it takes to address investor concerns,” said Hariharan.

Some acetic acid market sources in Mumbai expected business activities to return to normal in a week’s time but others were not as upbeat.

Offices could possibly be open a day later but it would take at least one week for business activities to normalise, said an acetic acid buyer.

A source from Reliance Industries said: “One week is quite optimistic.”

Most offices especially in the prime financial district around Nariman Point were shut, including those of chemical companies Reliance Industries and Deepak Nitrite as governments advised people to stay indoors following the attacks.

Earlier, a senior executive of a European petrochemical company in Mumbai at the time of the attacks said: “The atmosphere is bad. Schools and colleges are closed and offices in the prime area are also closed.”

He had been having dinner with colleagues about 400 metres from the Chatrapati Shiraji Terminus, the main train terminal which was also attacked as the assaults began late on Wednesday.


“I came out to take my laptop from the car and was told there were bombs about 400 metres away, so I ran into the restaurant to get all my colleagues to leave,” he said.


An Indian toluene trader said: “Most of our staff travel by train, and I do not think any one will be commuting in this situation.”


Trains were still running but due to the continuing hostage situation in the two hotels people would be scared to venture out on the streets, he added.


Added a base oils trader: “This type of attack focusing on the prime business locations is unprecedented,” said a base oils trader.


“There is a feeling of helplessness at present… the anger will come later. No-one wants to be caught on the road today so everything in south Mumbai is shut including businesses, stock exchange and schools."


Naresh Minocha, Helen Lee, Chow Bee Lin, Steve Tan and Anu Agarwal contributed to this article
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