Benchmark stock market indices crashed on Friday as the S&P BSE Sensex declined nearly 1,400 points and the NSE Nifty 50 fell almost 400 points.
At 11:20 am, the Sensex was down over 1,200 points or over 2 per cent as it fell below 57,600. The Nifty, too, plunged over 2 per cent during today’s trading session.
NEW COVID VARIANT SPOOKS INVESTORS
The bloodbath on D-street was triggered by a selloff by investors, triggered by negative sentiments in other Asian markets, following the discovery of a new mutation of coronavirus that could lead to another deadly wave and threaten global economic recovery.
It may be noted that the new variant (B.1.1529) has been detected in South Africa and scientists said that it “could be of real concern”. There are possibilities that the new Covid variant could pose a bigger risk than the Delta variant as well.
The news of the new Covid-19 variant has severely dented domestic equities, which were already under pressure over the past few days due to other factors like rising global inflation, poor earnings quarter, the recent surge of Covid-19 cases in Europe, and the US Federal Reserve’s hardened stance on monetary policy.
Another factor that led to today’s plunge on the stock market was sustained selling by Foreign Institutional Investors (FIIs) amid weak market sentiments over the past week. Due to today’s sharp plunge, investors have lost almost Rs 6 lakh crore.
While these factors have contributed to muted market sentiments, the fear of the new Covid-19 variant and lockdowns in many European countries seem to be the trigger behind today’s fall.