Stock market analysts said that despite the twin blasts in Mumbai on Monday, the market is on a strong footing and the impact will only be in the short term.
The blasts in Mumbai on Monday that left 45 people dead and over 150 injured, led to panic in the markets and a 120-point fall in the Sensex. The NSE Nifty too shed 40 points to close at 1271 points.
Panic was also witnessed in the forex and bond markets as the 9.81 per cent bond maturing in 2013 fell 0.40 or 40 paise per 100-rupee face amount to 133.60. The rupee fell to Rs.45.92 against US dollar from Friday's close of Rs.45.83.
The upswing in the economy and the markets will continue, they said.
Some brokers admitted that the blasts are certainly bad news and said that they would watch the government's reaction to the blasts.
Nervousness, they said, could grow if the involvement of the hostile nation's intelligence agencies was confirmed. They, however, stated that the markets will not go into a free fall, though they may slip a bit for a couple of trading sessions. However, most market players see the fall in the stock prices as the right time to buy into some scrips as the markets are 'certain to rise soon.'
Most analysts believe that the market is in a bull run and the undertone was buoyant, following the good show by various industry sectors, low inflation, strong forex reserves and a good monsoon.
The heartening first quarter results of various companies, the optimism in corporate India, low interest rates, signs of the return of the small investor to the markets, and the increase in investible funds too will add to the positive sentiment, said analysts.
Analysts say that though there might be some correction in the market, the ongoing bull run will continue despite the blasts. The sectors that fund managers advise investors to look at include banks, cement, textiles, oil and gas stocks, and FMCG.
Earlier, Finance Minister Jaswant Singh said that the fall in equity markets after blasts in Mumbai was a 'small blip' and the markets would remain stable.
"It was a small blip, markets are stable, fundamentals are strong," Singh told reporters when asked if the blasts would have any impact on financial markets.
The stock market, which has been on a roll, went into a tailspin and the BSE-30 sensitive index the Sensex -- crashed by 226 points as an immediate reaction to the two bomb explosions in the nation's financial.
By mid-session, the market turned volatile and fell to intra-day low of 3,943.66 but recouped to finally end the day at 4004.63 on the stock exchange Mumbai, a net fall of 120.49 or 2.92 per cent over Friday's close of 4125.12.
Nervous with the uncertainty in the market on reports of number of blasts, foreign funds in a knee jerk reaction resorted to panic sale.
"It is an unfortunate event and market does not like uncertainty. The impact will be of short-term nature and will definitely bounce back with general positive sentiment and strong economic fundamentals," Principal fund management chief executive officer Sanjay Sachdev said.
Association of Mutual Funds in India chairman A P Kurian said that the immediate reaction (the fall of the Sensex) will last only for few days and markets would be normal soon.
Kurian said the optimism about markets ability to overcome setback is based on the strong economic and corporate performance, though law and order as well as political developments may have an adverse impact in immediate terms.
HSBC Asset management Company chief executive Sanjay Prakash said: "Whenever market looks up, systemic issue (low and order) derails it. But, its impact will remain only for short term."
"The BSE index shed some more points. This could be an opportunity to enter into market and buy stocks at lower levels," Prakash added.
Industry chambers too said that the fundamentals of economy would remain unaffected and there was no need for panic following the two bomb explosions in Mumbai, even though the stock markets had come down.
Reacting to the dip in Sensex after the blasts in Mumbai, Federation of Indian Chambers of Commerce and Industry secretary general Amit Mitra said the foreign reserves of $85 billion would remain unaffected along with the food grain stocks of 51 million tonnes.
Appealing to the law enforcing agencies to 'quickly bring to book the guilty,' Mitra said that corporate growth is also expected to sustain its trend and that the Indian economy had the 'capacity to digest such incidents and there was no need for panic.'
Mourning the death of the victims of the blasts in Mumbai and recalling the incident as 'horrific,' Confederation of Indian Industry president Anand Mahindra said these were mere hindrances in India's march towards becoming an economic and political power.
Calling on the people of Mumbai to stand united and firm, Mahindra said, "It will be business as usual and we are not going to be deterred from becoming an economic power."
CII western region chairman Firdose Vandrevala expressed strong confidence in the resilience of the Mumbaikars and said "the explosions will not have any impact in the long run."
"India, its economy and the people are strong enough to withstand such attacks," he said, adding that in spite of these explosions, it would be business as usual in the city and rest of the country.
Share values virtually crashed on the country's leading bourses at mid-session after reports of blasts which rocked the business capital, driving the BSE index down by over 180 points, placing it at 3943.66.
The six trading-session winning streak was checked following reports of series of blasts and sudden developments on the political front in Uttar Pradesh, which wiped away any buying activity amidst all round panic selling.
"There was dramatic change in the market scenario which saw flood of sell-orders from all sectors including retail investors," said a leading stockbroker Manoj Choraria.
The fall was checked as domestic financial houses stepped in to pick stock at pretty low levels, he said.
Additional inputs: PTI
