Markets

Covid variant fear makes it a Black Friday for Nifty and Sensex

Our Bureau | | Updated on: Nov 26, 2021
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Sensex crashes 1,687 points, shaving off over ₹4.5-lakh cr of investor wealth

It was mayhem on Dalal Street with benchmark indices closing nearly three per cent lower on Friday, hitting a seven-month low, as concerns over a new vaccine-resistant Covid variant spooked investors.

The rupee also dropped 37 paise to hit its lowest level in three weeks and bond yields fell as concerns deepened across global markets over the new Covid variant.

Stock markets across Asia and Europe and in the US were a sea of red as large funds sold shares on reports that the World Health Organization was meeting to assess the emergence of the B.1.1.529 variant, which South African scientists have said contains more than 30 mutations to the spike protein.

Equities suffer

Asian stocks led the fall (see Table), while US markets, which were closed Thursday for Thanksgiving, opened in the red on Friday with Dow futures falling more than 800 points.

Sensex crashed 1,687 points to close at 57,107 and the Nifty index plunged 509 points to 17,026. As much as ₹4.5-lakh crore of investor wealth was eroded by the end of the day.

“Nervousness on the new Covid variant and expectations of the US increasing the pace of tapering have led to recent market weakness. This trend may take some time to reverse as the WHO meeting on the new mutant variant impact and hospitalisation rates in the US and Europe will be watched by the market closely,” said Amit Gupta, Fund Manager – PMS, ICICI Securities.

Other assets too hit

Cryptocurrencies, too, were not spared. Bitcoin declined by 7 per cent in the past 24 hours and crude oil prices tanked by 5 per cent. Gold and silver prices, however, surged by 1 per cent.

According to Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd, apart from Covid-related concerns, inflation remains a worry for countries. “FIIs have been net sellers this week. Equity markets in the near term will closely follow the impact of the new Covid variant, inflation data, and central bank policies,” he said.

Analysts told BusinessLine that Friday’s global markets fall was a knee-jerk reaction and that prices could recover in the coming days as they had rallied even when the Covid outbreak had hit its peak in 2020.

Pullback rally?

“There is blood on the street now but I’m looking for a quick reversal and a resumption of their upward trend from Monday,” said Sushil Kedia, founder of Kedianomics.

“While the short-term formation seems weak, a quick pullback rally cannot be ruled out if the Nifty index succeeds to trade above the 100-day simple moving average,” said Amol Athawale, Deputy Vice-President, Technical Research, Kotak Securities.

Published on November 27, 2021

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