Market Wrap, Dec 21: Lockdown in UK hits indices; Sensex sinks 1407 pts

Investors dumped domestic equities on Monday as panic selling, owing to the global rout seen in the Asian and European stocks, fretted domestic investors. The fall was triggered amid fears of a resurgence of coronavirus following a new strain in the infection in the United Kingdom (UK).

On Saturday, the UK government announced a lockdown in various parts of the country, including London, saying that more than half of all new Covid-19 cases had been caused by a mutated, more infectious coronavirus strain. The new virus strain is said to be 70 per cent more transmissible.

The S&P BSE Sensex breached below the 45,000-mark and sunk 2,133 points from the day's high, which was also its fresh record high of 47,030 level, to hit a low of 44,923 level in the intra-day trade. Nifty, on the other hand, tanked 646 points to hit a low of 13,131-mark. These were the indices' sharpest intra-day fall since April 2020.

At close, the Sensex settled at 45,554 levels, down 1,407 points or 3 per cent. Meanwhile, the Nifty50 index ended at 13,328 levels, down 432 points or 3.14 per cent. India VIX, the volatility gauge, jumped over 24% in the intra-day deals to hit a high of 23.6 levels. This was the index's biggest jump since July 18.

Among blue-chip counters, IndusInd Bank and M&M lost 7 per cent each, SBI skid 6 per cent, Bajaj Finance and Bharti Airtel slipped 4 per cent, and Reliance Industries lost 2.6 per cent on the Sensex. Analysts attribute this deep cut in large-cap stocks to the sharp run-up seen over the past two months. Since November, domestic markets have risen over 14 per cent amid massive liquidity, strong foreign fund inflows and development on the vaccine front. That said, investors are shying from taking strong positions in the market in this holiday-shortened week and ahead of the beginning of Q3FY21 earnings season.

Individually, aviation stocks, InterGlobe Aviation and SpiceJet sunk up to 10 per cent on the BSE after India suspended flights to and from the UK till December 31.

On the sectoral front, Nifty PSU Bank index cracked 7 per cent, Nifty Realty index skid 6 per cent, and Nifty Metal index dropped 5 per cent on the NSE.

Broader markets took sharper knocks and tanked nearly 5 per cent.

Notably, the slide in the markets gathered pace as European shares opened with sharp cuts. London's FTSE shed 2.1%, Germany's DAX 2.3% and pan-European STOXX 600 index skid 2.3%. In Asia, Japan's Nikkei shed 0.40% while Dow Jones futures were last down nearly 3 per cent, indicating a weak start for Wall Street.

Heightened risk aversion drove investors towards gold and silver whose February and March futures were trading 0.15% and 0.5% higher, respectively on MCX.