Market

Sensex crashes over 1,000 points: Key factors behind market fall

NEW DELHI: A gloom spread on Dalal Street on Friday as authorities detected a new mutation of the coronavirus that threatens the recovery made so far, giving the bears enough ammunition to send benchmark indices tumbling.

Scientists said the variant, detected in South Africa, may be able to evade immune responses. British authorities think it is the most significant variant to date, worry it could resist vaccines and have hurried to impose travel restrictions on South Africa.

“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,” said VK Vijayakumar, Chief investment Strategist at Geojit Financial Services. “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.”

How are bluechips doing
After opening in the red, benchmark indices plunged lower. At 9.59 am, BSE flagship Sensex was down 1048 points or 1.78 per cent to 57,747. NSE benchmark Nifty dropped 316 points or 1.80 per cent to 17,220.

“On the technical front, the key resistance levels for Nifty50 are 17,620 followed by 17,700 and on the downside 17,400 followed by 17,270 can act as strong support. Key resistance and support for Bank Nifty are 37,540 and 37,150 respectively,” said Mohit Nigam, Head – PMS, Hem Securities.

In the 50-share pack Nifty, Dr Reddy’s Labs was the biggest gainer, up 1.29 per cent. Cipla and Sun Pharma were among other gainers.

ONGC was the top loser in the pack, down 2.97 per cent. Tata Motors, Kotak Mahindra Bank, Tata Steel, Maruti Suzuki, SBI, Hindalco Industries and Bajaj Finserv were among those that traded in the red.

FACTORS DRIVING MARKETS

New Covid variant: Hours after South African authorities announced they had detected a new variant of the novel coronavirus with a “very unusual constellation” of mutations, the Centre directed states to rigorously screen and test travellers coming from or transiting through three countries in which the variant had been confirmed — South Africa, Botswana, and Hong Kong.

More lockdowns: European countries expanded COVID-19 booster vaccinations and tightened curbs overnight. Slovakia announced a two-week lockdown, the Czech government will shut bars early and Germany crossed the threshold of 100,000 COVID-19-related deaths.

Yields fall: Moves in Treasuries were also sharp following the Thanksgiving holiday and yields quickly pulled back some of the week’s gains. Benchmark 10-year yields fell nearly 6 basis points to 1.5841 per cent.

Tata Power, M&M among 5 stocks that Jefferies says can plunge up to 54%

Potential wealth destroyers

After a stupendous rally, the fundamentals of some companies are suggesting their shares have gained too much for their own good. The revenue and margins may not keep up with the rally in share prices, hence, they are likely to fall now. Jefferies India stock analysts have factored this in their coverage universe. The brokerage house has suggested five names that are likely to plunge as much as 54 per cent from current levels.

Broader markets
Broader market indices were trading lower, outperforming their headline peers in morning trade. Nifty Smallcap was down 0.69 per cent while Nifty Midcap declined 1.13 per cent. Broadest index on NSE, Nifty 500 was down 1.24 per cent.

Dr Lal Pathlabs, Fortis Healthcare, Aditya Birla Capital, Trident, AstraZeneca and Thyrocare Technologies were gainers from the space while PVR, DeltaCorps, SpiceJet, Godrej Properties, National Aluminium and Indian Hotels were under selling pressure.

Global markets
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.3 per cent, its sharpest drop since September. Casino and beverage shares sold off in Hong Kong, and travel stocks dropped in Sydney.

Japan’s Nikkei skidded 2.5 per cent and U.S. crude oil futures fell nearly 2 per cent as well amid fresh demand fears.

The selling in Asia has global shares, on course for their worst week since early October. Dow Jones futures fell 1 per cent, while FTSE futures and Euro STOXX 50 futures each dropped about 1.4 per cent.

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