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New mutant strain impacts Indian markets

Markets showed their concern for the latest mutation of the Coronavirus when they fell by over 3% on Monday the 21st of December. The impact will be seen in your equity investments but it is a short term reaction for now.

What’s the news?

The discovery of a fast-spreading Coronavirus mutant has spooked the markets, leading to Sensex and Nifty falling over 3%

What does this mean?

Indian stock markets suffered their worst single-day loss in more than seven months on Monday tracking a selloff across global equities over fears of a coronavirus mutant strain. The Sensex ended 1,406 points (3%) lower to close at 45,554, whereas the Nifty settled at 13,328, down 432.15 points, or (3.14%), from its previous close. All the sectoral indices ended in the red. 

Nifty PSU Bank index shed 7 %, while Metal, Infra, Bank, Auto and Energy indices fell 4-5 %. Since November, Indices have risen over 14% amid massive liquidity, strong foreign fund inflows, and development on the vaccine front.

Some of the events that spooked the market

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 % more transmissible. 

Following this, a number of countries, including India, imposed travel bans ahead of the Christmas and New Year holiday season. European market witnessed further selling pressure, as the UK and EU failed to reach a trade deal before the decided deadline. 

Investors are concerned that this new strain of the virus and consequent lockdowns and travel bans could hamper the pace of economic recovery. 

What it means for you

Stock markets react to short term news but as an investor, it is important to consider long term economic prospects. We continue to be positive about the prospects of India in the long run. 

 

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