The resilience of Sensex to terrorist attacks on India has been proved time and again. Post-1993, in eight out of 13 incidents, the Sensex gave a positive return after the attacks were committed. In fact, a day after the 1993 Bombay bombings, the BSE Sensex jumped over 2 per cent. Of course, after the initial resilience the BSE Sensex edged lower in the week following the attack. Typically, in 11 out of 13 such weeks after the attacks, the stock index ended lower. But there has not been any panic reaction at Bombay Stock Exchange.
In fact, legendary investor Rakesh Jhunjhunwala urged investor community to buy shares if the India Sensex panics after the November 26 Mumbai attack. In major BSE Sensex news, even FII investors say that the incident would only have a short-term impact. The long-term story of India remains intact.

In fact, they say that India remains much more stable than other emerging nations. Of course, they say that security issues are likely to crop up after the dust settles over the terror attack. It has to be agreed that the November Mumbai attack is different from what it suffered earlier. So the Sensex may react differently this time. In this current seize, it the wealthy that have suffered as compared to the previous attacks where only common citizens were the worst suffers. Of course, the coincidence of monthly settlement day of derivatives on the BSE Sensex and the opening day would prevent the market from reacting in panic. However, there may be a delayed reaction to the reaction to the move. The exact reaction of the market can only be known the next week.

But something is sure and this has a bearing on India Sensex: The investment climate in the country will take a hit after this attack, which it seems was more targeted towards Westerners. From corporates there have been some kneejerk reactions in the form of travel advisory. Dell banned India travel for its staff while HP temporarily shut its Mumbai office. Even Australia urged its citizens to avoid India travel. But it seems Sensex took these in its stride in the day it opened, hoping that it would only have a short-term impact. Amidst the Mumbai drama, two pieces of positive BSE Sensex news got drowned out. Inflation slipped further continuing its downward journey and second quarter GDP figures were better than expected.

We can also be sure of another depressing fact: Mumbai?s ambition to emerge as a global financial market will take a backseat. But after the attack on Westerners, Mumbai?s image would be impacted. To emerge as a financial capital, Mumbai needs to emerge as a secure place first. The attack also comes at a worse time when the whole world is battling a financial crisis. But Mumbai can take some heart from New York which saw even a bigger impact in the 9/11 attack. But what is distressing in case of Mumbai, is its crisis management system which came under fire. Ratan Tata, chairman of Tata Sons, which owns the Taj Mahal hotel, one of those attacked by the terrorists, said the lessons from the earlier attacks seems to have been forgotten. In the 15 years to the 1993 attack on the city, the city has seen some attacks. But there still no crisis management system in place.