And yet it was the discovery of a new variant of the Covid-19 virus found in South Africa that set the cat among the Dalal Street pigeons.
The new Covid variant appears to be a substantial threat given that multiple countries have already banned direct flights from South Africa and other African countries where the virus has been found. The WHO is yet to decide if the variant is of concern.
The fear was palpable in the deep shade of red that painted trading screens and it was evident in the biggest spike in the India VIX index in 2021 so far. The fear gauge or the volatility index spiked nearly 25 per cent and closed above the 20 points mark.
For analysts, the spike in the VIX is a tell-tale sign that investors are worried about the new variant derailing the global growth recovery and more so, that it will force them to recalibrate the blue-sky valuations that they have given to their portfolio stocks so far.
Reopening stocks get butchered
At the altar of Covid-19, it is always the stocks that benefit from an open economy that get butchered and the story was not different today.
As the news of the new variant came in, investors rushed to the exit doors in stocks that they had driven up on the back of optimism that high vaccination would make lockdowns a thing of the past.
Shares of airline, hotel and leisure stocks came under heavy selling pressure as future growth expectations would now need to factor in the distinct possibility of more lockdowns going ahead if the new variant becomes as threatening as the delta variant.
Pharma stocks get a new life
One of the losers of the reopening of the economy and investor preference for stocks of sectors that benefited from it was pharmaceutical stocks.
However, with investor focus shifting again towards the pandemic, pharmaceutical stocks are likely to make a comeback, especially those who have a considerable presence in Covid-19 treatment drugs.
No surprise then that on a day when every sectoral index on the NSE ended in deep red, the Nifty Pharma index gained a handsome 1.7 per cent. With investors turning defensive and valuations in the sector rather reasonable, pharmaceutical stocks may become the best place to hide for investors in December.
