Black Friday: New Covid variant concerns, global cues drag Sensex down over 1,600 pts, Nifty below 17,100

26It 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.

Over 2,200 stocks decline

The market breadth turned in favour of the decliners, with 2,224 stocks declining on the BSE as against 1,067 that advanced while 104 remained unchanged. Furthermore, 397 stocks hit the upper circuit compared to the 178 stocks locked in the lower circuit. Besides, 237 stocks touched a 52-week high level, and 34 touched a 52-week low.

The volatility index rose 24.84 per cent to end above 20 at 20.80, signalling increasing concerns among investors.

Negative global cues and sustained foreign outflows have impacted investor sentiments. According to experts, one of the biggest concerns currently is the rising Covid situation across Europe and some Asian countries. The latest variant of the virus detected in South Africa, Botswana and Hong Kong have added to the concerns. Against the backdrop of the new variant, the Centre has called for rigorous screening and testing of international travellers from “at-risk” countries, including Botswana and Hong Kong.

Investors lose ₹5.5 lakh crore in a day

Binod Modi, Head Strategy at Reliance Securities, said, “Nifty witnessed corrected over 2 per cent in a single day today mainly on weak global cues and heavy sell-off across the sectors. Barring Pharma, most sectoral indices contracted 1.5 per cent to 5 per cent.”

According to Modi, investors, wealth was eroded by over ₹5.5 lakh crore in a single day today. For the week, benchmark Nifty corrected for the second consecutive week by over 3.5 per cent and the India market cap fell over ₹9 lakh crore during the week.

Only four stocks- Cipla, Divi’s Lab, Dr Reddy and Nestle India closed in the green on the Nifty 50. JSW Steel, Tata Motors, Hindalco, Adani Ports and IndusInd Bank were the top losers.

Vinod Nair, Head of Research at Geojit Financial Services, said, "On the domestic front, broad-based sell-off was witnessed as investors dumped covid-sensitive stocks while the focus was shifted towards the pharma sector amid growing concerns over the new variant with higher mutations."

Pharma, healthcare in focus

On the sectoral front, all indices except Nifty Pharma and Nifty Healthcare closed in the red.

Auto, Metals, PSU Bank and Realty suffered the highest losses. Nifty Metal was down 5.34 per cent, while Nifty Realty was down 6.26 per cent at closing.

Nifty Auto and Nifty PSU Bank closed over 4 per cent lower. Nifty Bank, Nifty Financial Services, Nifty Private Bank and Nifty Consumer Durables were down nearly 4 per cent each. Nifty Oil & Gas was down 3.49 per cent.

Meanwhile, Nifty Pharma and Nifty Healthcare Index were up 1.70 per cent and 1.75 per cent, respectively.

Broader indices

Broader markets also witnessed selling pressure, with broader indices closing in the red.

Nifty Midcap 50 was down 3.80 per cent, while Nifty Smallcap 50 was down 2.69 per cent. The S&P BSE Midcap was down 3.23 per cent, while the S&P BSE Smallcap was down 2.61 per cent.

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