Indian stock markets fell sharply today in tandem with a similar selloff in other Asian markets over fears of a new South Africa Covid variant that could be could be more infectious than Delta. The Sensex fell about 1700 points to settle at 57,107 while Nifty slumped about 3% to 17,026. Just two stocks – Nestle and Dr Reddy’s – among the Sensex 30 pack ended in green.
The news of the new covid variant has hammered confidence in equities, which were already under pressure as traders prepared for the Federal Reserve to start tightening its monetary policy to fend off surging inflation.
Just as this particular tail risk was melting away into the background, scientists in South Africa have announced they have discovered a new Covid variant which could potentially be more transmissible. While the impact on human life is not yet established, the re-imposition of movement restrictions is likely to hurt economic activity. The South African Rand (ZAR) weakened past the 16 level for the first time this year,” said Kristal.AI, a wealth management platform, in a note.
Markets plunged sharply on worries of rising Coronavirus cases in the west and reports of a new Covid variant. Due to weak global market conditions, we saw investors booking profit at higher levels.
The Nifty has formed a long bearish candle and after a lengthy correction it is currently trading near the 100-day SMA. On daily charts, the index has broken the important support level of 17200 and closed below the same. While the short term formation is weak, a quick pullback rally is not ruled out if the Nifty succeeds to trade above the 100-day SMA.
For day traders, 17150 or 100-day SMA would be the immediate hurdle above the same. On the flip side, trading below 17150, the index could decline up to 16900-16750 levels.
