The domestic market was already seeing sharp foreign outflows amid rising inflation globally and a hawkish US Federal Reserve stance. The fresh Covid fears could result in a flight to safe havens and selling in riskier assets, which could only increase equity outflows from emerging markets like India.
Data showed investor wealth, as measured by BSE market capitalisation, plunged by Rs 6.55 lakh crore to Rs 259.11 lakh crore from Rs 265.66 lakh crore a day ago, with severe fall coming in the second rung indices that fell up to 2.8 per cent. The market breadth was extremely weak, with two stocks falling for every one that rose.
“When there is too much frenzy, too much euphoria and reasons come about for the correction. Similar variant detections happened previously also. News flows have come and as we heard, only around 100 cases are confirmed at this stage all over the world. In the context, that is very minuscule. Previously also, the South African variant did not spread around the world. But markets need to correct to get over the excesses,” said Sandip Sabharwal, asksandipsabharwal.com.
At one point, the BSE Sensex was down over 1,400 points while Nifty50 was quoting below 17,150. Midcap and smallcap indices were down up to 2.8 per cent. Fear gauge India VIX soared 15.45 per cent to 19.24.
Hemang Jani of Motilal Oswal Financial Services noted that EU has announced temporary ban of flights from South Africa and few EU countries are already under full lockdown scenario.
Sensex falls! But these stocks are up over 10% on BSE; Key factors driving market lower
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.
“There is fear of this new variant spreading to other countries, which might again derail the global economy. Already there is uncertainty as to when the US Fed will start raising interest rates. So markets might continue to reel under pressure and would actively track Covid situation globally,” Jani said.
Investment guru Jim Rogers, however, believes that central banks globally would come to the market rescue if things go downhill from here on.
Rogers said when things start shaking for a while, central bankers panic and they would do anything they can to save the bubble, save the bull market and prosperity.
“If something causes the markets to go down, whether there is a new virus or whatever, central bankers would get scared and they would do something to save us all,” Rogers said while answering a question.
In an interview with ET NOW, Rogers said stocks like Amazon and Google are wildly expensive in the US market. He said stocks such as Samsung and certain Japanese stocks go up every day and could be in a bubble, but not everything.
“I am not selling yet because I can see there are a lot of stocks that have still not skyrocketed. When everything skyrockets, then you know we are very close to the top,” Rogers said.
