Amid New COVID Variant, Sensex Dips to 7-Month Low; Closes at 57,107 Points

This came a day after India called for screening and testing of flyers from South Africa, Hong Kong, and Botswana.

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(Photo: Altered by The Quint)

Indian equity benchmarks saw one of the worst plunges since April on Friday, 26 November, as investors turned sellers, with the Sensex falling more than 1,600 points to close at 57,107.15, after a new and possibly more vaccine-resistant COVID-19 variant was detected.

Nifty tanked 509.80 and closed the day at 17,026.45, news agency PTI reported.

This came a day after India called for rigorous screening and testing of flyers coming from South Africa, Hong Kong, and Botswana, where the new variant with multiple mutations that have led to a surge in infections was detected.

VK Vijayakumar, Chief investment Strategist at Geojit Financial Services confirmed the same saying, "The new headwind is the latest variant of the virus detected in South Africa, Botswana and Hong Kong. This along with sustained selling by FIIs for the seventh consecutive day are major sentiment negatives for the market”, Economic Times reported.

Equity investors’ wealth, reflected in terms of market cap of BSE-listed firms, dropped over Rs 7 lakh crore from last day to Rs 258.21 lakh crore.

Vijayakumar was further quoted as saying, “However, an important point to note from the market perspective is that the recent surge in Covid cases in Europe has not impacted the markets there. Since valuations continue to be high, investors have to be cautious".

Meanwhile, European countries, concerned with the rising COVID cases, have expanded booster vaccinations and imposed several restrictions.

For instance, while Germany is considering compulsory shots for some vulnerable groups, Italy has imposed limits for unvaccinated people.

Denmark is considering making face masks mandatory in public transport. In Austria, leisure travel has been restricted along with a three-week lockdown, Bloomberg reported.

Manoj Dalmia, founder and director of Proficient Equities explained that "a new variant of COVID has been found which threatens to create a negative sentiment with some countries tightening curbs. This variant is of concern that it might resist vaccines. Stretched valuation of markets and concerns over the liquidity tapering by the US Federal Reserve also added to nervousness among market participants," NDTV reported.

(With inputs from PTI, The Economic Times, NDTV, and Bloomberg.)