Business

Sensex crashes about 1,300 points amid new variant in S Africa, rising COVID cases, slump in crude oil prices

The Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) were trading over 2 per cent lower in the early afternoon session on Friday

 (PTI file photo)
(PTI file photo) 

A combination of global factors led to the Sensex crashing 1,300 points and the NIFTY dipping below the 17,200-mark. The Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) were trading over 2 per cent lower in the early afternoon session on Friday.

Post noon, the S&P BSE Sensex was down 1,378.47 points (2.34 per cent) at 57,416.62, while the Nifty 50 was down by 415.50 points (2.37 per cent) to 17,120.75. Both the markets had opened over 1 per cent higher at start of trading and losses extended as the session progressed.

Reports of rising COVID cases world-over amid a mutation in the virus reported in South Africa, a slump in crude oil prices, losses in Asian bourses and the metals and banks drove the major losses. The surge in coronavirus cases in Europe which could lead trade and travel disruption, spooked investors leading to Asian markets trading lower on Friday.

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Overnight, scientists in South Africa identified concerns of a new variant of the coronavirus, whose mutations they said marked a ‘big jump in evolution.’ As cakes spiked, Britain imposed a ban on flights from six southern African nations, citing the variant.

Prashanth Tapse, Vice President (Research) at Mehta Equities Ltd, a SEBI Certified Research Analyst observes that following the Asian trades, Indian markets had overreacted to the concern over the new Covid variant found in South Africa last night followed by few EU countries under full lockdown scenario.

“Traders are selling riskier assets like equities in fear, which could result in increased equity outflows from Foreign Institutional Investors (FII). We believe India is not in panic mode and investors should make use of this selloff as a buying opportunity. The new variant should not be a great matter of concern for us and we suggest investors with suitable risk appetite to consider and start allocating money into markets who have missed the rallies,” Tapse reveals.

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In the afternoon trade, the fall was led by Reliance Industries Ltd (RIL), Housing Development Finance Corporation (HDFC), ICICI Bank and HDFC Bank, while pharma major Dr Reddy's, tech giant TCS and Nestle traded higher.

Other than the pharmaceutical shares, all sectors were deep in the red in early deals. Broader markets also weakened, with the midcap and small-cap indices down 0.9 percent and 0.4 percent respectively.

Avendus Wealth Management’s Suveer Chainani was quoted by television news reports as saying that “COVID was a bear argument when it began, but became a bull argument later.”

Meanwhile, in a communication to all states and Union Territories, Union Health Secretary Rajesh Bhushan said that India’s National Centre for Disease Control has informed that multiple cases of a COVID-19 variant B.1.1529 have been reported in Botswana (3 cases), South Africa (6 cases) and Hong Kong (1 case).

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