Economists fear that terrorist attacks in Mumbai will adversely impact India's image as an investment destination at a time when the country was trying to shore up its depleting foreign exchange reserves.
"Terror strike is likely to have a significant and tangible impact on the economy. This would damage India's image because institutions like hotels are closely associated with business," said HDFC chief economist Abheek Barua.
In short-term, he said, "it would impact the stock markets and in the long term it may affect India's image as an important investment destination."
India's stock markets, forex markets and commodity exchanges remained closed on account of terror strike which paralised normal working in the financial capital of the country. Terrorists have targeted key hotels including Taj and Trident.
"In the short term, there will definitely be some panic, fear and apprehensions," ICRA vice-chairman and Group CEO P K Choudhury said, adding there will be some impact on investment flows.
However, he added, in the long run, "business will be again back on the track...Mumbai is the business hub and will continue to remain so."
Former Reserve Bank Governor and presently Rajya Sabha member Bimal Jalan said, "It is a time for consolidation, support and solidarity in the country and across the border."
Noting that some people are worried that strike will effect the foreign investment, he said, "I don't think so as...it (terrorism) affects every country."
Terror strikes in the financial capital come at a time when India is battling the impact of the global financial meltdown that has resulted in depletion of foreign exchange reserves by over $60 billion during the current financial year.