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Shares crash as new COVID-19 strain spooks investors

·6-min read

Key equity indices corrected sharply on Monday, tracking weak global cues. All sectoral indices on the NSE ended in the red. PSU stocks, banks and metal shares witnessed major selling.

As per provisional closing data, the barometer index, the S&P BSE Sensex, lost 1406.73 points or 3% to 45,553.96. The Nifty 50 index slumped 432.15 points or 3.14% at 13,328.55.

Investors locked profits after the Sensex added 2.18% and the Nifty gained 2.09% in the past six consecutive sessions. The imposition of fresh lockdown restrictions in several European countries as well as growing risks of a no-deal Brexit after the deadline ends on 31 December 2020 dampened global risk appetite.

Over the weekend, the U.K. said it had identified a new strain of COVID-19 which spreads more quickly than previous variants. Following that announcement, other nations said they would be temporarily restricting travel from the U.K. in efforts to prevent the new strain from entering their borders.

India on Monday announced that it will temporarily ban flights from UK to the country after the emergence of a new and highly infectious strain of the coronavirus in Britain.

"Considering the prevailing situation in the UK, Indian govt has decided that all flights originating from the UK to India shall be temporarily suspended till 11:59 pm, 31st December. This suspension to start w.e.f. 11.59 pm, 22nd December," the Ministry of Civil Aviation tweeted.

The selling was broad based. The S&P BSE Mid-Cap index crashed 4.14% while the S&P BSE Small-Cap index lost 4.57%.

Sellers outnumbered buyers. On the BSE, 594 shares rose and 2,430 shares fell. A total of 168 shares were unchanged.

The US Dow Jones futures were down 288 points, indicating a weak start in US markets today.

COVID-19 Update:

Total COVID-19 confirmed cases worldwide stood at 7,68,23,486 with 16,93,205 deaths. India reported 3,03,639 active cases of COVID-19 infection and 1,45,810 deaths while 96,06,111 patients have been discharged, according to the data from the Ministry of Health and Family Welfare, Government of India

Primary Market:

The initial public offer (IPO) of Antony Waste Handling Cell received bids for 82.29 lakh shares as against 66.66 lakh shares on offer as on 21 December 2020, according to the National Stock Exchange (NSE) data at 15:00 IST. The issue was subscribed 1.23 times.

The issue opened for subscription today (21 December 2020) and closes on Wednesday (23 December 2020). The price band for the IPO is set at Rs 313-315 per share. An investor can bid for a minimum of 47 equity shares and in multiples thereof.

The issue comprises of a fresh issue worth Rs 85 crore and an offer for sale (OFS) of 6,824,933 equity shares by existing shareholders. Shares will list on 1 January 2021 on bourses.

Buzzing Index:

The Nifty PSU Bank index slumped 7.47% to 1,635.20. The index has slumped 12% in five days.

Indian Bank (down 11.9%), Canara Bank (down 10.98%), Bank of Maharashtra (down 9.7%), J&K Bank (down 7.28%), Punjab National Bank (down 7.25%), Union Bank of India (down 7.23%), Bank of Baroda (down 7.21%) and SBI (down 6.96%) declined.

Stocks in Spotlight:

Reliance Industries (RIL) fell 2.52%. RIL and bp on Friday announced the start of production from the R Cluster, ultra-deep-water gas field in block KG-D6 off the east coast of India. RIL and bp are developing three deepwater gas projects in block KG D6 – R Cluster, Satellites Cluster and MJ – which together are expected to meet approximately 15% of India's gas demand by 2023. These projects will utilise the existing hub infrastructure in KG D6 block. RIL is the operator of KG D6 with a 66.67% participating interest and bp holds a 33.33% participating interest.

PVR slumped 7.64%. PVR said its board of directors approved the issue of equity shares of the company for an aggregate amount not exceeding Rs 800 crore. PVR said its board of directors approved the issue of equity shares of the company of the face value of Rs 10 each, against which American Depository Receipts (ADRs) or Global Depository Receipts (GDRs) may be issued, foreign currency convertible bonds, non-convertible debt instruments along with warrants, and/ or other securities in one or more tranches for an aggregate amount not exceeding Rs 800 crore.

Mahindra & Mahindra (M&M) slipped 6.69%. The auto major said it will increase the price of its range of tractors, across models from 1 January 2021. The price hike has been necessitated due to the increase in commodity prices. Details of the price increase across different models will be communicated in due course, M&M said in a statement issued on Monday (21 December 2020).

Glenmark Pharmaceuticals fell 5.79%. The drug major received tentative ANDA approval for Dabigatran Etexilate capsules. The drug company announced that it has received tentative approval by the USFDA for Dabigatran Etexilate capsules, 75 mg, 110 mg, and 150 mg. The capsules are generic version of Pradaxa Capsules, 75 mg, 110 mg, and 150 mg, of Boehringer Ingelheim Pharmaceuticals, Inc.

AstraZeneca Pharma India fell 1.77%. The pharmaceutical major said that India's drug regulator has granted marketing authorization for benralizumab 30mg/mL solution for injection. Benralizumab (Fasenra) is indicated as an add-on maintenance treatment for severe asthma with an eosinophilic phenotype in adult patients.

Exide Industries fell 5.12%. Life Insurance Corporation of India (LIC) bought 1.73 crore equity shares (or 2.039% stake) in Exide Industries through open market between 8 June 2017 and 17 December 2020.

Global Markets:

European markets slumped on Monday. Traders are nervously watching the new COVID-19 mutation in the U.K., which has resulted in a tough lockdown in London and other parts of southeast England. The variant is thought to be up to 70% more transmissible than the original strain of the disease. The World Health Organization said it has so far been identified in Denmark, the Netherlands and Australia.

The situation could further complicate Brexit talks. Britain and the European Union remain in a deadlock over post-Brexit trade relations as a 31 December 2020 deadline looms, with disputes over issues such as fisheries plaguing negotiations.

Most Asian markets ended higher on Monday. China on Monday kept its Loan Prime Rates unchanged, in line with market expectations. The one-year and five-year LPR were kept at 3.85% and 4.65%, respectively.

In US, stocks ended lower on Friday, pulled down by uncertainty around a coronavirus stimulus deal, while Tesla shares jumped in heavy trading in anticipation of their addition to the S&P 500. Meanwhile, Moderna Inc's coronavirus vaccine on Friday became the second to receive emergency use authorization (EUA) from the US Food and Drug Administration.