India's markets seen relieved; PM to caretake finance

India's markets will likely react positively on Monday when a cabinet reshuffle sees the prime minister take on the finance portfolio, just days after the nation was rattled by the deadly attacks on Mumbai.

India's economy showed its slowest pace of growth in nearly four years in the September quarter, and its rupee and stock markets have been pummelled by the global financial crisis.

Now, after three days of attacks by gunmen in the heart of its financial capital, Mumbai, in which nearly 200 people died, analysts say security and confidence will be the top priority.

With Finance Minister Palaniappan Chidambaram moving to the Home Ministry following the resignation of the home minister, analysts say Prime Minister Manmohan Singh, architect of early 1990s economic reforms, is probably the man for the job.

"There are serious concerns on the economy and the big challenge is going to be rebuilding confidence of investors," said Mahesh Rangarajan, political analyst in New Delhi.

"And there is a greater confidence in Singh because of his midas touch."

India's financial markets stayed shut on Thursday as security forces battled gunmen holed up in three locations in Mumbai's financial district.

The benchmark share index .BSESN gained 0.7 percent to 9,092.72 points when trading resumed on Friday, with expiry of options contracts leading investors to buy back shares.

BIG PICTURE

The index has plunged 55 percent this year, with foreign investors withdrawing a net $13.7 billion as the global market turmoil widened, and equity analysts criticised Chidambaram, saying he had not managed to keep the economy stable.

"But probably markets should open in the positive," said Deven Choksey, chief executive of brokerage KR Choksey.

Bond yields fell on Friday, as dealers anticipated interest rate cuts to shore up confidence and bolster the economy.

The central bank has slashed its key lending rate by 150 basis points to 7.5 percent since the global crisis swept through India's markets in October and the benchmark 10-year bond yield closed down 2 basis points at 7.07 percent.

"The market continues to anticipate rate changes," said Arvind Sampath, head of bond trading at Standard Chartered in Mumbai. "We are expecting the 10-year bond yield to trade in a 7.07-7.12 range."

Only the rupee came under pressure, shedding 1.2 percent to 50.09/12 per dollar, not far off a record low of 50.60 set earlier in November.

"Whatever has happened over the last few days is pretty serious. The first priority has to be that," A. Prasanna, analyst at ICICI Securities, said.

"I think the market will take a more big picture view and it is a positive development only. Nobody needs to second guess the PM's credentials, in his ability to run the ministry."

With only a few months likely to go before national elections, analysts were sceptical whether much could be done to shore up growth, which slowed to an annual 7.6 percent in the September quarter, a far cry from the 9 percent seen in the whole of the 2007/08 fiscal year.

Some expressed concern with the security issue and whether the prime minister's focus would be distracted, but others said Singh has already been more involved in running the economy as the financial crisis deepened.

Source: Reuters

Mumbai attacks: Are other cities not vulnerability?

Whatever group lies behind the attacks in Mumbai, security experts say one thing has been made abundantly clear: a massive city can be reduced to mayhem if a group of men is well-enough armed and prepared to die.

Rather than hijacking planes as in September 11, or smuggling delicately wired car bombs into a city, the Mumbai gunmen chose a frontal style of armed assault, killing more than 100 people, wounding around 250 and causing immense panic in a thriving city of 13 million.

Security specialists say the attack was probably months in the planning and appears to have been finely tuned in its execution, but it ultimately relied on only an estimated 25 gunmen lightly armed with assault rifles and hand-grenades.

Their ability to roam around and sustain the attack, while all the while being willing to die in the onslaught, made it all the more difficult to combat and far more drawn out than an instantaneous suicide bomb attack might have been.

"It's virtually impossible to stop 20 guys with guns from attacking anywhere in the world if they are prepared to die," said Sajjan Gohel, an analyst with the Asia-Pacific Foundation, an independent security and intelligence group based in London.

"That is the thing about the fedayeen strategy," he said, using an Arabic term used to describe self-sacrificial gunmen who have operated in Iraq, Kashmir and across the Muslim world.

"It's even more effective than a suicide mission. With a suicide mission, you blow up your explosives and you're gone. With a fedayeen attack, you try to last out as long as possible, killing as many people as possible," he told Reuters.

Nearly 20 hours after the attack began late on Wednesday night, Indian soldiers and the militants were still exchanging gunfire and more than 100 people were trapped inside the Taj Mahal hotel, one of two five-star hotels popular with Western tourists and businessmen that were targeted in the assault.

Indian authorities closed stock, bond and foreign exchange markets, schools were shuttered and panicked foreigners on holiday or on business were desperate to flee, reducing India's business powerhouse to a tense, semi-warzone.

"Men armed with automatic weapons are able to run amok and keep the situation going for much, much longer," Henry Wilkinson, a senior analyst with Janusian Security Risk Management, a London-based consultancy, told Reuters.

"Whether it's intended or not, that creates an extended drama which is all the more terrifying."

AL QAEDA

Given the boldness of the assault, its high-level of planning and the fact that foreigners were specifically targeted, security specialists believe there is likely to have been a degree of inspiration from or link to external groups allied to Al Qaeda, such as the Pakistan-based Lashkar-e-Taiba.

They say the tactics are different from the more common, post-9/11 attacks seen in Iraq and Afghanistan, but still bear similar hallmarks.

"It's very interesting that they didn't go in using car bombs, it was more of a direct armed assault on a city," said Wilkinson. "It's very reminiscent of the attacks in Saudi Arabia in 2003, when the gunmen were going around trying to find Westerners and kill them."

Wilkinson highlighted the fact the Mumbai gunmen appeared to have used only assault rifles and hand-grenades, giving them much more mobility and freeing them up to take hostages.

"I would suggest that using guns and hand-grenades was a deliberate choice... The amount of planning and training they must have done to carry out such an attack is impressive."

Such an assault might be mounted virtually anywhere in the world, he said, making cities in Europe and the United States vulnerable, even if such an outcome remains unlikely.

In London in 2005 four suicide bombers killed 52 people on public transport and brought the city to a standstill.

Both attacks underline just how hard it is for democratic states to protect themselves against such attacks without draconian security measures and powerful intelligence.

"I can't see any reason -- if there is a terrorist group that has the capability... attacks like this in Europe or the United States can't be discounted," he said.

One advantage for Indian authorities and any intelligence services called in to help investigate the Mumbai attacks is that at least nine gunmen are reported to have been seized.

In a suicide bombing, forensics can help investigators establish only so much. In this case, those detained are likely to reveal much more intelligence about who plotted the attack.

"The fact that a few of them have been seized is highly significant," said Wilkinson. "I think a lot more information about these attacks and who was behind them is going to come to light."

Source: Reuters

Who are the militants behind the Mumbai attacks?

Militants armed with automatic weapons and grenades attacked luxury hotels, hospitals and a famous tourist cafe in India's commercial capital Mumbai late on Wednesday, killing at least 101 people.

Who is behind the attacks?

Witnesses say the attackers were young South Asian men speaking Hindi or Urdu, suggesting they are probably members of an Indian militant group rather than foreigners.

The attacks were claimed by a previously unknown group calling itself the Deccan Mujahideen in an e-mail to news organisations. Deccan is an area of southern India. Analysts say that while it is not clear whether the claim is genuine, the attacks were most likely carried out by a group called the Indian Mujahideen. The name used in the claim of responsibility suggests the attackers could be members of a south Indian offshoot or cell of the Indian Mujahideen.

Who are the Indian Mujahideen?

Indian police say the Indian Mujahideen is an offshoot of the banned Students' Islamic Movement of India (SIMI), but that local Muslims appear to have been given training and backing from militant groups in neighbouring Pakistan and Bangladesh.

SIMI has been blamed by police for almost every major bomb attack in India, including explosions on commuter trains in Mumbai two years ago that killed 187 people.

Police said the Indian Mujahideen may also include former members of th Bangladeshi militant group Harkat-ul-Jihad al Islami.

In an e-mail to various media in September, the group denounced Mumbai's police anti-terrorist squad, accusing them of harassing Muslims.

"If this is the degree your arrogance has reached, and if you think that by these stunts you can scare us, then let the Indian Mujahideen warn all the people of Mumbai that whatever deadly attacks Mumbaikars will face in future, their responsibility would lie with the Mumbai ATS and their guardians," it said.

The Indian Mujahideen have made credible claims of responsibility for most of the recent major attacks on civilian targets in India over the past two years.

The Mumbai attacks appear to have been carefully co-ordinated, well-planned and involved a large number of attackers. A high level of sophistication has also been a hallmark of previous attacks by the Indian Mujahideen.

The Mumbai attacks also focused clearly on tourist targets, including two luxury hotels and a famous cafe.

In May, the Indian Mujahideen made a specific threat to attack tourist sites in India unless the government stopped supporting the United States in the international arena.

The threat was made in an e-mail claiming responsibility for bomb attacks that killed 63 people in the tourist city of Jaipur. The e-mail, signed by "Guru Al-Hindi", declared "open war against India" and included the serial number of one of the bicycles on which the bombs were left.

Witnesses in Mumbai say the attackers in Mumbai singled out Americans and Britons in their attacks.

The group first emerged during a wave of bombings in the northern state of Uttar Pradesh in November 2007, sending an e-mail to media outlets just before some of the bombs exploded. Their next attacks were the Jaipur blasts.

On July 25, eight small bomb attacks in the IT city of Bangalore on July 25 that killed at least one person and wounded 15. There was no known claim of responsibility.

But a day later, at least 16 bombs exploded in Ahmedabad in the state of Gujarat, killing 45 and wounding 161. Shortly before the blasts, an e-mail in the name of the Indian Mujahideen was sent to local media warning that people would soon "feel the terror of death" in the name of Allah.

It said the attacks were revenge for the Gujarat riots of 2002, when around 2,500 people, most of them Muslims, were killed by Hindu mobs. A later e-mail accused several state governments of harassing, imprisoning and torturing Muslims and threatened consequences if they did not stop.

In September, at least five bombs exploded in crowded markets and streets in New Delhi, killing at least 18 people. The Indian Mujahideen sent out an e-mail moments after the first blast in New Delhi, saying the explosions were to prove its capability to strike in the most secure of Indian cities.

All previous incidents in which the Indian Mujahideen are suspected of involvement involved co-ordinated serial bombs. The Mumbai attacks also show clear signs of co-ordination but were carried out by gunmen, some carrying grenades.

The tactics, a military-style assault on soft targets, singling out foreigners, and taking hostages, are rare and do not fit the usual methods of militant attacks on civilian areas.

However, similar attacks have been carried out before, notably the May 2004 attacks in the eastern Saudi city of Khobar.

Gunmen attacked two oil industry installations and a foreign workers' housing complex in the city, taking more than 50 hostages and killing 22 of them. The attackers asked hostages whether they were Christian or Muslim before deciding whom to kill.

Source: Reuters

Bloggers feed frenzy info on Mumbai blasts!

Bloggers across Mumbai fed live updates of the action after Islamist gunmen launched waves of attacks in the heart of India's financial capital, highlighting the emergence of citizen journalism in news coverage.

Some, including a blogger named Vinu, were furiously uploading photos of damage from the attacks that killed at least 101 people and injured 287, with scores of foreigners, including Westerners trapped in luxury hotels.

Images of the attacks also surfaced on photo-sharing website Flickr.Some bloggers provided running descriptions and commentaries from near the action, while others vented emotions."I've been tweeting almost all night, too, from Mumbai. Upset and angry and bereft," said businesswoman Dina Mehta on her blog, www.dinamehta.com/blog.Twitter, the wildly popular "micro-blogging" site where users communicate with short "tweets" of 140 characters or less, saw intense activity on Thursday.

Within five seconds at 0748 GMT, 80 messages were posted. Posts included offers of help for the media and updates on the situation."One terrorist has jumped from Nariman house building to Chabad house - group of police commandos have arrived on scene," one tweeter wrote.

Twitter came in for some criticism as well in the blogosphere for divulging too many details that could prove helpful to the gunmen holed up in the hotels with their hostages and who may have been been monitoring blog sites.

"It's a terrorist strike. Not entertainment. So tweeters, please be responsible with your tweets," said one blogger identified as primaveron@mumbai.Several local Indian news channels were reported to have carried a live feed of the twitter updates on the Mumbai attacks.

Source: Reuters

Mumbai attacks will not slow investment, says Kamal Nath

Trade Minister Kamal Nath said on Thursday the attacks on high profile targets in the country's commercial capital would not slow investment into an ecomomy already under strain.

At least 101 people were killed by gunmen in the attacks on some of Mumbai's top hotels, a popular cafe, a busy railway station and other locations. Hostages were taken in two of the hotels.

"This does not have an economic component. It's an unfortunate event. These type of things have happened in New York and other major cities," Nath told Reuters by telephone.
"(There will be) no slowdown in investment flows."

The global downturn has already rattled Indian financial markets and a credit squeeze has prompted the government and central bank to take a series of measures to lift sagging growth.
The Reserve Bank expects the economy to expand by 7.5-8 percent in the 2008-09 fiscal year, slowing from 9 percent posted in the last three years.

India's capital market regulator said the country's two major stock exchanges would remain closed on Thursday.

Source: Reuters