UpdateMumbai business hit by terror attacks

27 November 2008 17:41  [Source: ICIS news]

(Updates paragraphs 2-5)

 

LONDON (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.

 

Gunmen targeted at least seven sites in the city late on Wednesday, leaving at least 110 people dead and over 300 injured.

 

At 22:30 local time (17:00 GMT) on Thursday, elite commandos had begun an operation to free hostages held at the Oberoi-Trident hotel, where dozens of people were reported to be trapped or held captive.

 

Flames were seen rising from the Oberoi-Trident hotel, while hostages were reported to have been released from the Taj Mahal Palace, though explosions and gunfire were heard there by witnesses outside.

 

India’s Prime Minister Manmohan Singh said he was willing to take “whatever measures necessary” to track down those responsible for the attacks.

 

“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 indices 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 government 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 the government advised people to stay indoors following the attacks.

 

Earlier, a senior executive of a European petrochemical company who was 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.”

 

The executive said he had been having dinner with colleagues about 400 metres from the Chatrapati Shiraji Terminus, the main train terminal that 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 anyone 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.

 

“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."

 

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

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< previous article(ICIS Chemical Business podcast November 2, 2009)

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