Sensex tanks 2.9% on new variant fears

Wary of travel: Hotel and airline stocks plunged globally on fears of the likelihood of fresh travel curbs.   | Photo Credit: VELANKANNI RAJ B

The benchmark S&P BSE Sensex suffered its biggest single-day fall in more than seven months on Friday, slumping almost 3%, as fears of a new novel coronavirus variant that may be possibly vaccine-resistant spooked investors worldwide.

The Sensex slid the most since April 12, plunging 1,687.94 points, or 2.87%, to close at 57,107.15.

Twenty six of the 30 index members declined with IndusInd Bank (6.01%), Maruti Suzuki (5.27%) and Tata Steel (5.23%) leading the losers. Drugmaker Dr. Reddy’s, however, gained 3.32%.

“The bears were in control from the beginning as a new variant of [the virus that causes] COVID-19 raised concerns globally and they further tightened their grip as the session progressed,” said Ajit Mishra, VP - Research, Religare Broking Ltd. “Though COVID is not new to the market, the reaction is largely in response to the news of a different variant while the U.S. and Europe are already struggling,” Mr. Mishra added.

Hotel and airline stocks plunged with InterGlobe Aviation Ltd., parent of budget airline IndiGo, sliding 8.81% and Indian Hotels Co. declining 11.1%.

“The way markets have closed on Friday, we expect more pain in the coming sessions,” said Mr. Mishra, adding that apart from the global COVID-related updates, investors would also be eyeing domestic data like GDP numbers and auto sales for cues in the coming week.

U.S. stocks, oil slump

The Dow dragged Wall Street’s main indexes lower, with travel, bank and commodity-linked stocks bearing the brunt of a sell-off triggered by the discovery of the new variant, Reuters reported.

United Airlines, Delta Air Lines and American Airlines slumped almost 10%.

Ten of the 11 major S&P sectors fell in early trading, with energy sliding 6.3%.

Oil prices dived about 6%, hitting a two-month low on fears the variant could dampen economic growth and fuel demand. Brent crude fell $5.40, or 6.5%, to $76.82 a barrel by 1452 GMT.

Global stock markets sold off sharply after reports that the new variant was detected in South Africa, with scientists saying it has an unusual combination of mutations, may be able to evade immune responses and could be more transmissible.

“This could be the moment that people look back on as derailing the economic recovery and rate rises but what we have is a big insertion of uncertainty rather than something material,” said Peter Rutter, head of equities at Royal London Asset Management.

“The very fact we don't know is what’s concerning the market,” he added.

(With inputs from Reuters)

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Printable version | Jan 29, 2022 9:48:37 AM |

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