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Indian shares drop most in 7 months on fears over new virus variant

A man walks past the Bombay Stock Exchange (BSE) building in Mumbai, India, January 31, 2020. REUTERS/Francis Mascarenhas/File Photo

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  • Indexes down by about 8% from their all-time highs
  • Hotels, airline stocks fall on travel restrictions worry
  • Pharma stocks up on expectations COVID-19 drugs demand will rise

BENGALURU, Nov 26 (Reuters) – Indian shares sank nearly 3% on Friday as fears that a new, possibly vaccine-resistant coronavirus variant could wreak more economic damage prompted investors to dump equities globally.

The blue-chip NSE Nifty 50 index (.NSEI) ended down 2.91% at 17,026.45 and the benchmark S&P BSE Sensex (.BSESN) closed 2.87% lower at 57,107.15, both marking their biggest daily drops since April 12.

The losses also pushed the Nifty 50 to its worst weekly performance since late January, with both the main indexes losing over 4% this week to move further away from a record high struck in October.

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Markets globally were lower after scientists said the new variant detected in South Africa has an unusual combination of mutations, may be able to evade immune responses and could be more transmissible. That led India to tighten COVID-19 testing for tourists. read more

“Nervousness on the new variant and expectations of the U.S. increasing the pace of tapering have led to recent market weakness,” Amit Gupta, fund manager at PMS at ICICI Securities, said in a note.

The travel and leisure index plunged by their most since 2020, with shares of InterGlobe Aviation Ltd (INGL.NS), the operator of India’s biggest airline IndiGo, falling 8.86%.

Hotel operators such as Indian Hotels Co (IHTL.NS) and Lemon Tree (LEMO.NS) were down 11.43% and 8.61%, respectively.

Metals, auto, banks, energy and realty sub-indexes were down between 3.6% and 6.2%.

Pharmaceutical stocks helped cap some losses on the Nifty on expectations that demand for COVID-19 drugs would increase again.

Cipla (CIPL.NS) rose as much as 8.5%, its biggest percentage gain in over 14 months. Pfizer’s India unit (PFIZ.NS) and Dr Reddy’s Laboratories (REDY.NS) were the other major pharma gainers, ending the session 4.97% and 3.47% higher.

The World Health Organization will meet on Friday to evaluate if the new variant is a “variant of concern.”

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Reporting by Vishwadha Chander and Chris Thomas in Bengaluru; editing by Uttaresh.V and Aditya Soni

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