Data on Friday showed the economy expanded 7.6 percent in the September quarter, well below the 9 percent seen in all of 2007/8 but well above developed economies most of which are seen already in recession.

India's state-dominated banking sector is seen better protected than most from the global crisis, and with the economy more focused on domestic demand and less on exports than fellow Asian powerhouse China some still see it as one of the most attractive emerging markets.

Still Keen

"You will probably see foreign investors will be warier than usual after this," said Jeff Chowdhry, head of emerging equities at London-based fund manager F&C. "But we remain positive and see it as an appealing market."

F&C was overweight on India with 10 percent of its $2 billion in emerging markets there, he said.

He said the attack -- in which the gunmen were said to be deliberately targeting those with British and American passports -- was not enough to deter F&C from sending staff to India in the near future to maintain contact with their investments.

India has seen periodic militant attacks in recent years, notably bombings that have killed hundreds. Investors largely shrugged them off, but will inevitably pay more attention to the deliberate targeting of the hotels in which they stay.

Further attacks would spook them further, but without them analysts say the market reaction to last week's events could be short-lived.

Even if it was decided staff travel to India was too dangerous, F&C's Chowdhry said that would not necessarily prompt a sell-off as he would expect major Indian firms to travel to London to maintain heightened contact with their investors.

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