Investors Worry about Another 26/11

A year after terrorists struck Mumbai on this day, the risk of another such attack keeps investors worried who fear that a second attack similar to last year’s Mumbai raids could shake what has so far proved to be a resilient economy.

Foreign investors bought more than $15 billion in Indian shares this year, helping local stocks gain nearly 80 percent, in a vote of confidence for the trillion-dollar Indian economy.

However, terror attacks made investors think that any new attack could  trigger regional tension and panic in an economy that is just recovering from the global economic slowdown.

“While India has made some improvements to its counter-terrorism capabilities, it remains vulnerable to terrorist activities,” wrote Maria Kuusisto of Eurasia Group.

“Another high-profile, mass-casualty attack would lead to intense domestic pressure on Delhi to adopt a more firm policy towards Pakistan and even retaliate, which would raise regional tensions.”

Businesses in Mumbai, which was also a target in serial bomb blasts in 1993, lost about $800 million after the 2008 strikes. The stock exchange was shut for a day and hotels and airlines struggled as countries issued travel advisories.