Benchmark domestic indices took a knock just an hour before closing as both plummeted sharply as investors turned nervous after the discovery of a new ‘more infectious’ Covid-19 strain in the UK.
At around 2:44 pm, S&P BSE Sensex fell over 2.7 per cent at 45,655.04 while NSE Nifty 50 was hovering above the 13,300-mark. By 3 pm, both Sensex and Nifty tumbled over 3 per cent due to increased market volatility. The volatility gauge, India VIX, has jumped sharply by almost 20 per cent.
The key reason behind today fall can be attributed to the fresh restrictions in the UK due to the new strain of coronavirus discovered. The strain spreads faster and has a transmissibility rate of 70 per cent, almost 20 per cent higher than the previous strain.
Stocks on Sensex and Nifty were painted in red, as both benchmarks tumbled sharply after six straight sessions of posting gains. However, broader markets fell more than benchmarks. Even Reliance shares, which helped markets remain in green in early trade, fell over 3 per cent.
Nifty PSU Bank index, which was struggling since today’s market opening, has been hit hardest. All other sectoral indexes remain in the red. Energy and Infra stocks have also been hit.
Markets had initially fallen over 2,000 points but managed to pare some losses. However, both Sensex and Nifty are deep in the red.
Experts are of the view that the new strain of coronavirus in the UK has emerged as a serious concern. The market plummeted as investor turned nervous due to restrictions on travel and economic activity right before Christmas.
It may be noted that several European countries have suspended air travel to the UK. Some of them are Germany, Italy, Belgium, Denmark, Bulgaria, the Irish Republic, Turkey and Canada.
Not just India, the ‘out-of-control’ strain of Covid-19 has negatively impacted markets around the globe; the European markets fell 2 per cent. It even overshadowed the fact that US lawmakers are finally set to approve a deal on the stimulus package.
Besides the renewed Covid-19 fear, profit booking also led to today’s market collapse. Whether markets will recover tomorrow remains to be seen, but the new Covid-19 strain seems to have dented the D-Street optimism witnessed over the last many sessions.