The stock markets are set to brave the terrorist attack on the Parliament today with a drastic fall in prices virtually ruled out by the players.
The foreign exchange and government bonds markets are also unlikely to see abnormal volatility. The refrain among participants is that the bourses will continue to remain rangebound.
Bond prices should stay stable, while the rupee is expected to veer around to 47.85 levels against the dollar.
After shedding nearly 100 points immediately after the attacks, the Bombay Stock Exchange 30-share Sensex rebounded to wind up at 3,388.59, down 23.56 points from Wednesday's close, but nearly 80 points off the intra-day low of 3308.86 points.
"The trend after the attacks clearly indicates that the market has absorbed the shock and the next few days will be cushioned," said Arun Kejriwal of KRIS.
The FIIs are unlikely to pull out and this will avert heavy losses, sources said. FIIs have been consistently investing during the past year with the intensity increasing over the last two months.
"This is basically because the current low valuations enable purchases of larger quantities. Moreover it does not make sense to sell out at these levels and take losses," Anup Bagchi, chief operating officer, ICICIdirect.com, said.
Additionally, given the value of rupee which has sharply depreciated over past year, it helps the FIIs to invest more in equities at lower dollar cost.
The extremely low interest rates also encourage investments in equities at throwaway prices, sources said.
Technical analysts said since the Sensex closed above the crucial barrier of 3380 despite the intra-day slide, a plunge is not portended. "Had the index closed below 3380, we could have seen a downward spike. Now the markets may consolidate and remain rangebound," said Neel Dalal, member, Bombay Stock Exchange.
However, if there is any cross-border tension in the next few days, the market may see erosion in values.
Today, the markets had opened in line with expectations with a 25 point positive gap followed by choppy trading.
However, all hell broke loose as the news of the terrorist attack on Parliament flashed, pulling the Sensex down by 99 points.
But statements by ministers, the extermination of the terrorists after a hour-long battle and an aggressive statement from the Prime Minister brought back things to normal.
Funds, especially the Unit Trust of India, supported the markets, while operator driven stocks got hammered.
The operator-led stocks will further lose in case of fresh tension because they are mostly speculation-driven.
"However, the damage control, if any, in such a scenario will be done by the defensive stocks," a broker said.
The defensive sector stocks such as HLL, ITC, Reliance Industries and Gujarat Ambuja Cement managed to restrict the sharp fall witnessed earlier during the day, brokers pointed out. Techs remained largely volatile as they were the obvious casualties of panic selling.
But pharma stocks such as Ranbaxy, Dr Reddy's and Cipla stood up against what looked like a hostile day for investors.
The bourses showed exemplary character by taking the attacks in its stride. "The stance of the government would come out by late night and by the weekend which could give vital signals but markets look capable of handling any panic for now," said a broker.
