MUMBAI: A new mutant strain of COVID-19 discovered in the UK spooked global investors and saw India's stock markets plunge to their biggest single-day fall in the last seven months on Monday. The two key indices — S&P BSE Sensex and NSE Nifty50 - fell by over 3 per cent.
The day's carnage saw Sensex losing a total market capitalisation worth around Rs 7 lakh crore.
It is speculated that 'Basket' selling by FPIs likely triggered the sharp fall in Indian markets. Foreign investors pulled-out liquidity worth Rs 323.55 crore on Monday. Besides, high valuation and absence of any positive trigger added weight to the slide.
In intra-day trade, Nifty50 touched a low of 13,131.45 points while Sensex plunged to 44,923.08 points.
Globally, investors were spooked at the prospects of economic damage unleashed by a new and more contagious COVID-19 strain discovered in the UK. Air travel linkages to and from many regions of the world including India to the UK has been suspended. The day's trade session saw European markets crashing 2-3 per cent.
However, the US Congress agreement on $900 billion of fiscal stimulus provided some support to the markets.
Back home, the Indian markets had a 'gap down' opening soon started to recede at an alarming pace.
All sectoral indices ended in in the red with private banks, financials, auto, pharma, energy and infra falling in the range of 3-5 per cent. Broader market indices line Midcap and Smallcap fell more than the Nifty.
At the end of the day's trade, the Sensex plunged to 45,553.96 points, down 1,406.73 points, or 3 per cent, from its previous close.
Similarly, Nifty50 fell to 13,328.40 points, down 432.15, or 3.14 per cent, from its previous close.
"Nifty has formed a large bearish candle which has engulfed the high low range of the previous 9 sessions. In the process, two upgaps formed in this period have been filled nullifying the bullishness. The advance decline ratio on the NSE on December 21 was the worst since March 23, 2020 when the COVID fears were at the peak. This suggests across the board panic selling or profit booking," said Deepak Jasani, Head of Retail Research at HDFC Securities. "A large fall on a Monday does not augur well for the week. A breach of 13,209 on the Nifty could result in another 200-250 point fall."
Siddhartha Khemka, Head, Retail Research, Motilal Oswal Financial Services, said: "Nifty succumbed to selling pressure across the globe. UK-exposed stocks like Tata Motors, Motherson fell on the new COVID strain. Even aviation stocks were under pressure over the UK border closure."
"Energy stocks were weak as global oil prices dropped by about 3 per cent. Going ahead, the market may consolidate in near term till the concerns over new strain subsides. Further with the Christmas vacation starting, the FII liquidity could slow down, thus constraining the market."
Gaurav Garg, Head of Research, CapitalVia said: "The market capitalisation of BSE declined more than 3 per cent in today's session. 2,351 stocks closed on a negative note whereas only 561 stocks ended higher. Indian markets reversed the last 11 days rally and plunged 3 per cent."
"This correction was overdue in the market and was trying to find a reason which now it has found. The total market capitalisation of BSE-listed firms plunged to Rs 178 lakh crore from Rs 185 lakh crore."
On his part, Vinod Nair, Head of Research at Geojit Financial Services, said: "As we all know, the vulnerability of the market was high due to quick gains made in the ongoing rally leading to low margin of safety." (IANS)