'FIIs may pull out more money following terror attacks'

The unprecedented terror attack in Mumbai is likely to exert additional pressure on foreign institutional investors' (FII) sentiments, already hit by the global economic downturn, in the short-term, rating agencies said today.

"There is an uncertainty among the foreign investors, especially FIIs given the adverse sentiments in the aftermath of the Mumbai terror attacks.... There may be further flight of the FII money from the market in the coming days," Global rating agency, Standard & Poor's Managing Director and Regional Head Ravi Mohan told PTI here.

"However, foreign investors are likely to come back once there is normalcy by way of right policy measures from the central and state governments to enhance the national security," he said.

"Investment sentiments of FIIs will depend on the policy measures from the central and state governments. On the FDI side, I don't expect any slow down as the capital demand is very high in different sectors," Mohan said.

Nearly 200 people were killed and around 350 injured in a spate of terror attacks that rocked the commercial capital for three days, exposing the vulnerability of the world's largest democracy to terrorist operations.

Experts said those sectors like tourism, hospitality and automobile may also feel the heat of the negative sentiments after the recent attacks but is likely to regain the momentum in the short- to medium-term in line with the improving domestic situations.