Indian stock markets fell sharply today with similar selloff in other Asian markets on fears of a new South Africa Covid variant, which could be more contagious than Delta. Sensex closed nearly 1700 points lower at 57,107 while Nifty fell nearly 3% to 17,026. Of the 30 Sensex packs, only two stocks – Nestle and Dr Reddy’s – ended in the green.
News of the new COVID-19 hit has dented confidence in equities, which were already under pressure as traders prepared for the Federal Reserve to tighten its monetary policy to contain rising inflation.
“Just as this particular tail risk was melting into the background, scientists in South Africa have announced that they have discovered a new COVID variant that could potentially be more permeable. While the impact on human life is not yet established. The re-imposition of movement restrictions is likely to hurt economic activity. The South African rand (ZAR) weakened from the level of 16 for the first time this year,” said Kristal.AI, a wealth management platform, in a note.
Auto, bank and energy stocks were the worst hit in the Indian markets. Nifty Pharma index was the only sub-index ending the trend higher by 1.7%.
“Indian markets after Asian trades are reacting to concerns over a new Covid variant detected in South Africa last night, following which some EU countries are under a complete lockdown scenario. Traders in fear are selling riskier assets like equities, which may result in increased equity outflow from FIIs. We believe that India is not in a panic position and investors should use this selloff as a buying opportunity. The new version should not be a concern for us and we advise investors to take appropriate risk and start allocating money in markets that have missed rallies,” said Prashant Taapsee, Vice President (Research), Mehta Equities .
A flare of uncertainty also sent safe-haven currencies with the yen – the unit known in times of turmoil – moving higher against the dollar.
The B.1.1529 strain has been blamed for the surge in fresh cases in South Africa and has already cropped up in Hong Kong, with the World Health Organization due to hold a meeting later in the day to decide. As for whether it should be designated a type of “interest” or “concern”.
The number of daily infections in South Africa has increased tenfold since the start of the month. In response, Britain banned all travel from the country and five other southern African countries as concerns grew about the new variant, which scientists say could be more infectious than Delta and more resistant to current vaccines. Is.
“Unfortunately we have detected a new variant, which is a cause for concern in South Africa,” virologist Tulio de Oliveira told a hastily convened news conference.
The variant, which goes by the scientific label B.1.1529, “has a very high number of mutations,” he said.
The WHO said it was “closely monitoring” the reported version and expected to meet on Friday to determine whether it should be designated as “of interest” or “concern”. “Preliminary analysis suggests that this variant has a large number of mutations that require further study,” the WHO said.
The fact that US markets were closed for Thanksgiving on Thursday and trading will thin on Friday “means a wall of buyers is missing”, meaning the moves will intensify, analysts say.
,with agency input,
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