The Indian share market on Friday saw a drop almost nearly to 3% following the vaccine-resistant new Covid-19 variant emergence, which could possibly cause more damage to the economy. The fear of a new variant has prompted the investors to unload the equities global market. The drop has been the biggest since April 12.
The Sensex dropped to 1,801 points or 3% and the bluechip NSE Nifty 50 index was closed at 2.91% at 17,026.45. With this, the numbers hit an intraday low of 16,985.
Both benchmarks S&P and BSE Sensex ended at a 2.87% low at 57,107.15, both benchmarks witnessing their biggest drop rates in three months.
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This collapse has also pressed the Nifty 50 index displaying one of its poorest performances for the first time since January. With this, both the major indexes have suffered a loss of more than 4% during this week, which is moving farther away from the high record hit in October.
After scientists expressed concern regarding the new variant that was discovered in South Africa, global markets took a dip. The new variant is believed to contain an abnormal mix of mutations which will help it escape immune responses and be more transmissible. This discovery made India tighten its COVID-19 testing and protocols for tourists.
PMS at ICICI Securities fund manager, Amit Gupta said that "Nervousness on the new variant and expectations of the U.S. increasing the pace of tapering has led to recent market weakness."
The news of the new variant hit the travel and leisure index the hard since 2020 as shares of InterGlobe Aviation Ltd, the operator of India’s biggest airline IndiGo, fell by 8.86%.
Players of the hospitality industry like Indian Hotel Co and Lemon Tree also saw a downfall of 11.43% and 8.61% respectively.
Others like metals, auto, banks, energy and realty sub-indexes were down between 3.6% to 6.2%.
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A forecasted demand for COVID-19 drugs helped gap some losses for the pharmaceutical stocks on the Nifty.
Cipla’s with an 8.5% saw the biggest gain in over 14 months. Dr Reddy’s Laboratories and Pfizer’s India unit were the other major pharma companies that saw a gain of 3.47% and 4.97% respectively.
The new variant will be evaluated by the World Health Organisation on Friday to understand if it is a “variant of concern”.