Market wrap: Sensex sinks 1,688 pts, Nifty holds 17K; Rs 7.5-trn investor wealth lost

Top headlines

• Sensex, Nifty slide 3% each as new Covid variant sparks global sell-off

• Investors lose Rs 7.45 trillion amid market crash

• Pharma stocks soar as investors turn to defensive bets

• Dollar index inches towards 97 mark

• Dow Jones Futures cracks 900 pts

Stocks in Asia suffered their sharpest drop in three months today, and oil tumbled nearly 5 per cent. This was after the detection of a new and possibly vaccine-resistant coronavirus variant sent investors scurrying toward the safety of bonds, the yen and the dollar.

MSCI's index of Asia shares outside Japan fell by 2 per cent in its sharpest drop since August, while Japanese, Korean, and Chinese benchmark indices fell by up to 3 per cent.

In Europe, the stocks lurched lower with the UK's FTSE100 and Germany's DAX sliding 3 per cent each and France's CAC40 falling 4.6 per cent in early deals. Dow Jones Futures also slumped over 900 points, or 2 per cent, indicating a weak start on Wall Street.

Back home, the BSE Sensex ended 1,688 points, or 2.9 per cent, lower at 57,107. During the day, the index hit a high of 58,255 and a low of 56,994.

The NSE Nifty, on the other hand, closed at 17,026, down 510 points or 2.9 per cent. The index slipped below the 17,000 mark intra-day and hit a low of 16,986, a first since August this year.

The benchmarks witnessed their biggest intra-day fall since April 12, 2021, and also their biggest weekly fall since January 29, 2021. Consequently, the volatility gauge, India VIX, climbed 25 per cent and hit a 6-month high of 21.

26 of the 30 Sensex constituents and 46 of the 50 Nifty constituents closed in the negative territory today. 

JSW Steel, Hindalco, BPCL, IndusInd Bank, Tata Motors, Adani ports, Tata Steel and Maruti Suzuki were the top laggards on the benchmarks today, all down by up to 7.7 per cent.

Sectorally, healthcare and pharma indices ended around 2 per cent higher each. Export-linked sectors like auto and metals crumbled on the bourses. The Nifty Metals index closed 5 per cent lower and the Auto index shed 4 per cent.

Meanwhile, the Nifty Bank index fell 3.6 per cent and the Nifty Realty index slipped 6 per cent.

Going ahead, analysts are cautious on equities. They are advising investors to remain in a wait-and-watch mode and not jump in to buy stocks across the board.

According to Christopher Wood, who is global head of equity strategy at Jefferies, this renewed Covid outbreak is clearly the biggest risk to GREED & Fear’s recommended cyclical trade.

For Amnish Aggarwal, research analyst at Prabhudas Lilladher, the period till December-end holds significant risks as the festival season and free movement of people can bring the third Covid wave in India. At present, there are no cases of the new Covid-19 variant in India.

Against this backdrop, analysts suggest only investors with high risk appetite to invest in defensive plays like pharma and FMCG stocks at lower levels.

On technical charts, 57,200 and 17,100 may act as near-term support for the Sensex and Nifty, respectively. If they are unable to sustain this level, the indices may respectively fall towards 56,300 and 16,400 in a short span.