With the Bombay stock exchange’s Sensex index closed by the time the explosions occurred, it was left to international bourses to reflect the initial reaction of investors. In the US, American depository receipts of Indian bellwethers such as Dr Reddys Laboratories, Tata Motors and Infosys Technologies all traded lower. In London, it was Standard Chartered, the biggest foreign-owned bank in India, that bore the brunt of the markdown.

Through its $1.3 billion purchase of Grindlay’s Middle East and South Asia businesses from ANZ six years ago, Standard has a substantial presence in India. It employs 13,000 staff across 102 offices in 31 cities, with India now the third-largest territory for Standard in revenue terms. Further, India is forecast to account for 8 per cent of this year’s profits. Standard, recently unsettled by concerns that trading in Korea is becoming more challenging, closed 36p lighter at £12.87.

Elsewhere, Cairn Energy, which is planning to spin off its flagship Indian assets on the Bombay stock exchange by the first quarter of next year, dipped 49p at £20.95, with Vedanta Resources, the only Indian constituent in the FTSE 100, down 22p at £13.70.

The Bombay blasts put downward pressure on a FTSE 100 already struggling from a weak opening on Wall Street, and left the benchmark index 39.6 lighter at 5,857.3.

The worst blue-chip performance came from International Power, off 10¼p at 285p on arbitrage activity related to its issuance of a €200 million (£138 million) convertible bond and profit-taking after publication of the Government’s Energy Review. The review also caught British Energy, off 19p at 690p, and Drax Group, 9p easier at 860½p.

But it was Vodafone Group, down 2p at 117¾p, that contributed most to the FTSE 100’s retreat. UBS yesterday downgraded the mobile operator from “buy” to “neutral” after cutting its price target from 153p to 131p. The Swiss broker fears that Vodafone is battling a “three-headed monster of regulation, competition and technology”, and sees little chance of a slowdown in its markets abating. SABMiller dipped 4½ p at 965½p on further jitters that Altria may soon seek to place its 28 per cent stake, despite the consensus from analysts that such a move is some months off.

Heading the other way, Enterprise Inns hardened 3½p to 958p as Credit Suisse repeated its “outperform” recommendation and raised its price target on the pub operator from £10.20 to £10.85. The Swiss broker has conducted a survey of publicans in Scotland, and finds that the impact of a smoking ban north of the border since March has been “relatively benign”. The broker also believes that Enterprise can return more than £1 billion to investors over the next two years.

Marks & Spencer added 2p to 585p on its trading update, helped by the purchase of 25,000 shares at 583p by Paul Myners, its outgoing chairman.

• NEW YORK: Stocks recouped earlier losses to end modestly higher. The Dow Jones industrial average closed up 31.30 points at 11,134.80, after tumbling as much as 75 points earlier.

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