Sensex falls after attacks, hotels plunge

Shares in Indian Hotels fell 13.5 per cent to 41.90 rupees and EIH was down 4.6 per cent at 88.60 rupees after their main hotels — Taj Mahal Hotel and Oberoi-Trident were damaged by the attacks.

By 12 p.m., the 30-share BSE index was down 0.64 per cent, or 57.54 points, at 8,969.18, with 20 stocks losing ground. It opened down 1.5 per cent and then rose as much as 0.6 per cent.

Traders said short covering ahead of the expiry of monthly derivatives and better-than-expected economic growth in the September quarter helped the market to pull back, but the outlook for the near term was weighed down by greater political risks.

“A knee-jerk reaction to the attacks was expected and it has happened and now I think the markets are behaving normally,” said Arun Kejriwal, strategist at research firm KRIS. “People here don’t like this to hammer down the markets.”

Volume was below normal at 66 million shares in the broader market, where losers led gainers two to one.

Outsourcers such as Infosys Technologies rose 3.2 per cent to 1,225 rupees and Tata Consultancy Services was up 4.2 per cent at 549 rupees, as investors hunted for bargains in battered stocks, traders said.

Data showed India’s economy grew 7.6 per cent in the September quarter from a year earlier, above market expectations for 7.3 per cent but below the preceding quarter’s 7.9 per cent rise.

Analysts said Mumbai was no stranger to political violence and markets had usually regarded previous bombings and other attacks with a degree of nonchalance.

Still, investors will be cautious.

“We have no doubt that the risk premium will rise in the short term,” Securities firm Macquarie analyst Seshadri Sen said in a note, adding the market would partly offset the shocks by gains in overseas markets in the past two days.

“Some fresh selling from the FIIs also may come as the situation has changed between Wednesday and today,” said Gajendra Nagpal, chief executive of Unicon Financial in New Delhi, referring to foreign institutional investors.

Foreign funds have withdrawn a net $13.7 billion from Indian shares this year, pushing the BSE index down 55 per cent.

The broader 50-share NSE index was down 0.44 per cent at 2,740.05.