Mumbai, Aug 26: Refrain in rattled markets: We will bounce back, no big deal unless there are riots or Indo-Pak tension back.
  • Economic growth is expected to be a robust 6.0-6.5 per cent in the current year, thanks largely to a generous monsoon

  • Foreign institutional investment in Indian companies is set to better the 1996 high of $3.05 billion.

  • On Saturday, RBI reduced the repo rate, indicating interest rates are headed south

  • Corporate net profits have zoomed an average 45 per cent in the first quarter of this financial year

  • Sensex has risen more than 1,100 points since April

  • Even the battered hospitality sector has seen some signs of revival.


    • When the bombs rocked south Mumbai, a high-powered team from German automobile giant Volkswagen led by Luke Wagner, director sales and marketing, had just left town.

    They were headed for Ranjangaon, an industrial area near Pune, looking for a plot to set up an automobile plant. The prospects of a presence in one of India’s most industrialised regions — the latest figures put Maharashtra’s share of FDI in 2002 at over Rs 4,800 crore — was too much for the Germans to resist.

    The automobile company was not even invited by the state government as usually happens. ‘‘We didn’t need to persuade them to choose Maharashtra. They came on their own,’’said Bhushan Gagrani, joint chief executive officer of Maharashtra Industrial Development Corporation, who accompanied the high-profile visitors to Ranjangaon.

    For an economy that’s just begun to wear a feel-good halo, clearly the blasts could not have come at a worse time. ‘‘Things are really looking up. Our financial situation is showing signs of improvement and investments are flooding in. I have reasons to believe that the blasts are aimed at destabilising us on the economic front,’’ a stunned Chief Minister Sushilkumar Shinde told The Indian Express. It’s taken Indian stock markets two-and-a-half years, but last week Mumbai’s benchmark stocks index finally pierced the magical 4,000-point barrier. Today, the Sensex tumbled a steep 180 points or nearly 5 p c, before recovering slightly to close 120 points lower at 4004.63. Hardened stocks analysts said even this was just a knee-jerk reaction.

    ‘‘In the long-term, I don’t see any major impact. Corporates will have to think about investing more in security. We will have to learn to live with these kind of incidents,’’ said Hemendra Kothari, chairman of DSP Merrill Lynch.CII president Anand Mahindra agreed: ‘‘India, its economy and the people are strong enough to withstand such attacks. In spite of these explosions, it will be business as usual tomorrow’’.

    Yet, the blasts have come just when the economy was back on an upswing. Just last Saturday, outgoing RBI governor Bimal Jalan said the central bank might revise upwards its 2003-04 economic growth projection. RBI had earlier placed the real GDP growth at about 6 p c, after taking into account the current trends in various macroeconomic factors.

    ‘Will FII investment continue at the same pace? Analysts say that while big investors are likely to take a breather, the two blasts aren’t big enough to scare them away.

    ‘‘It’s no big deal, unless the current situation escalates to riots or Indo-Pak tensions,’’ said Rajiv Anand, head of investments at Standard Chartered Mutual Fund.