The new variant of Covid found in South Africa and a rapid increase in cases worldwide, especially in Europe, have frightened the market. This new uncertainty eroded around 7.5 lakh crore of investor wealth on Friday alone.
The average new global cases on Thursday was 5.66 lakh, of which 63 percent, or 3.56 lakh, cases were from Europe, according to Our World in Data. The average worldwide cases increased by 48,000 in a week. Amid a severe surge in Covid in Europe, the average cases in the region have doubled in the past 38 days. In some countries like Germany and the Netherlands, cases have doubled in less than 20 days.
On Thursday alone, 54 percent of all Covid-related deaths worldwide were responsible for Europe. The fact that the Covid toll is still above 7,000 in one day worldwide has scared investors.
Evidence of a surge in the rise in Covid is also coming from another large market – the United States. The average daily deaths in the US are over 1,000 while the cases are around 90,000.
“Covid concerns have risen again as Europe sees a surge in cases and the discovery of a. recorded new variant in South Africa. Markets are realigning their expectations for growth momentum and policy response, ”Madhavi Arora, lead economist, Emkay Global Financial Services, told India Today’s Data Intelligence Unit. Indian markets are also orienting themselves to global nervousness and reacting accordingly, she added.
The pressure in the market is likely to continue in the coming days.
Read: Covid is devastating Europe again. We need to talk about it
“The market will likely remain under pressure until there is clarity about how dangerous this new variant of Covid can be,” Siddhartha Khemka, Head of Research, Broking & Distribution, Motilal Oswal Financial Services told India Today he added.
While global headwinds are affecting Indian stock markets, the COVID situation in the country appears to be under control. Given the situation, experts also believe that Sensex and Nifty have overreacted to the global clues.
“Indian markets are overreacting concerns about a new variant of Covid found in South Africa, followed by a few EU countries that are under a full lockdown scenario,” said Prashanth Tapse, Vice President (Research) at Mehta Equities , across from India Today.
Also read | Five things you need to know about variant B.1.1.529 of the coronavirus
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