New COVID Strain Scare: Sensex Dips Over 1,400 Points

Both the key indices — S&P BSE Sensex and NSE Nifty50 — fell by over 3 percent on Monday.

(Photo: IANS)

A mutant strain of COVID-19 not only strained the transport links to the UK but also spooked global investors, plunging India's stock markets deep into the red on Monday, 21 December.

Resultantly, India's equity benchmark indices fell the hardest in seven months.

It is speculated that 'Basket' selling by FPIs likely triggered the sharp fall in Indian markets.

Accordingly, both the key indices — S&P BSE Sensex and NSE Nifty50 — fell by over 3 percent on Monday.

In terms of intra-day, the Nifty50 touched a low of 13,131.45 points while Sensex plunged to 44,923.08 points.

Globally, investors were spooked at the prospects of economic damage unleashed by a new and more contagious COVID-19 strain discovered in the UK.

Consequently, air travel linkages to and from many regions of the world including India to the UK has been suspended.

The Indian markets had a 'gap down' opening, which started to recede at an alarming pace.

Besides, high valuation and absence of any positive trigger added weight to the slide.

All sectoral indices ended in the negative with PSU Bank, Media, Metals realty, Auto, Banks and Pharma indices being loss leaders.

Broader market indices line Midcap and Smallcap fell more than the Nifty.

At the end of the day’s trade, the Sensex plunged to 45,553.96 points, down 1,406.73 points or 3 percent from its previous close.

Similarly, Nifty50 fell to 13,328.40 points, down 432.15 or 3.14 percent from its previous close.

Volumes on the NSE were the highest since 27 November.

“Nifty has formed a large bearish candle which has engulfed the high low range of the previous 9 sessions. In the process two upgaps formed in this period have been filled nullifying the bullishness. The advance decline ratio on the NSE on 21 December was the worst since 23 March, 2020 when the COVID-19 fears were at the peak. This suggests across the board panic selling or profit booking,” said Deepak Jasani, Head of Retail Research at HDFC Securities.

"A large fall on a Monday does not augur well for the week. A breach of 13,209 on the Nifty could result in another 200-250 point fall."

According to Vinod Nair, Head of Research at Geojit Financial Services: "As we all know, the vulnerability of the market was high due to quick gains made in the ongoing rally leading to low margin of safety."

"Despite which, we do not expect a big correction rather a consolidation, in the short-term, of not more than 7 to 10 percent in the main indices. Buying at dips can be considered as a strategy in the falling market"

In addition, S Ranganathan, Head of Research at LKP Securities: "While the street was bracing for a correction this week after a sharp up move, the sheer velocity of the fall across broader markets took the bulls by surprise as practically none of the NIFTY constituents were in the Green today."