Could lead to investor panic.

Terror could lead to investor panic India's stock index futures and rupee forwards fell while credit-default swaps rose after militants killed more than 100 people in Mumbai, wounded hundreds more and took hostages. S&P CNX Nifty Index futures for delivery this month dropped the most in more than a week. Stocks, bonds and rupee trading were shut for the first time in more than three years as Indian commandos battled to free hostages held by gunmen at two hotels. The assault, injuring around 327, may worsen the effect of a global rout that helped to drive India's benchmark Bombay Stock Exchange Sensitive Index, or Sensex, 56 per cent lower this year and set for its worst performance on record. "It is worrying that the targets were foreigners and businessmen," said Ajay Bodke, who helps manage the equivalent of $872 million at IDFC Assets Management Company in Mumbai. "We will see a ripple effect in terms of investor sentiment as the terrorist attack was in the financial hub and in iconic places. India needs to deal with this with an iron hand." Both the Bombay Stock Exchange and National Stock Exchange were shut, along with bond, foreign exchange, commodities and money markets, the central bank said. Indian Trade Minister Kamal Nath said he was confident the deadly attacks would not slow investment. "This does not have an economic component," he said. His confidence was echoed by Jan Masiel, a member of the European Parliament. "I don't think this affects India's image as a good place to do business in," he said as he waited to go back into the Taj Mahal Hotel, where hostages were held and many died.

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