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Five global factors leave Indian markets marooned today

Revival of COVID threat, losses in Asian bourses, crude oil slump, and battered metals and financials lead to major fall in benchmark indices

November 26, 2021 / 03:59 PM IST

It was a carnage on Dalal Street today as the Nifty50 plunged more than 500 points to hit the day's low of 16,985.70 and closed 2.9 percent lower at 17,026.45 points. 

The BSE Sensex crashed about 1,800 points from the previous close to hit a day’s low of 56,993.89 points, and closed 2.8 percent lower at 57,107.15 points. 

All the sectors except pharma were in the red on November 26, with the metals, banks and autos being battered in trade. While the Nifty Metal index fell 5.3 percent, the Nifty Bank index fell 3.6 percent. Nifty Realty was another big loser, which fell 6.3 percent.

The crash comes a day after the markets had rebounded, with the Nifty50 being largely supported by gains in Reliance Industries.

Let’s check out the factors that weighed on the market today.


1. Fresh COVID worries

The World Health Organisation has flagged a new variant of virus, which is heavily mutated, in South Africa. It is expected to convene an emergency meeting to discuss the rapidly spreading strain, which could make vaccines less effective. The WHO said it is “closely monitoring” the reported coronavirus variant and will determine if it should be designated a variant of “interest” or of “concern” in the technical meeting on Friday.

“Early analysis shows that this variant has a large number of mutations that require and will undergo further study,” it said.

The Indian government has asked states to conduct rigorous screening and testing of all international travellers coming from and transiting through Botswana, South Africa and Hong Kong. Meanwhile, official figures released on Thursday showed Germany became the latest country to surpass 100,000 deaths from COVID-19 since the pandemic began.

2. Asian markets in the red

The surge in coronavirus cases in Europe once again threatened to disrupt trade and travel, which spooked investors and dragged Asian markets lower today.

While the Japanese Nikkei 225 was down 800 points or 2.7 percent, the Hang Seng was down over 550 points or 2.2 percent. The Australian S&P ASX 200 was down over 120 points or 1.7 percent on November 26. The Shanghai Composite Index lost 0.6 per cent to 3,562.09 points.

South Korea’s Kospi was lower by 1.2 percent in trade. It was under pressure also because the country’s central bank raised interest rates on Thursday as inflation and household risks continued to grow.

US markets were closed on Thursday for a holiday.

3. Crude slide on surplus concerns

Oil prices slid more than 1 percent on Friday on concerns that a global supply surplus could swell in the first quarter following a coordinated release of crude reserves among major consumers, led by the US. Brent crude futures extended declines for a third session, falling 1.2 percent to $81.26 a barrel. US West Texas Intermediate (WTI) crude was down $1.35, or 1.7 percent, at $77.04 a barrel.

4. Metals, financials under pressure

The Nifty Metal index was down 3 percent at 10:40am, with all the components in the red. Financials, which make up for the highest weightage on the Nifty, also saw heavy selling on Friday, with the Nifty Bank index trading 2.9 percent lower on Friday.

5. FIIs continue to sell 

As COVID risks rise and the dollar continues to strengthen, foreign investors are moving their money back to the safe haven market of the US. On November 25, FIIs net sold Rs 2,300 crore in the Indian equity cash market, taking the total so far in November to over Rs 25,300 crore. In the last four sessions alone, FIIs have sold shares worth Rs 15,000 crore. Moreover, the annual rate of inflation in the US hit 6.2% in October, the highest in more than three decades, as measured by the Consumer Price Index, which gave rise to expectations of faster rate hikes by the US Federal Reserve.

Here's what market experts are saying about the fall: 

Hemang Jani, Head of Equity Strategy & Senior Group VP, Broking & Distribution, Motilal Oswal Financial Services

Equity markets have plunged almost 2% amid the emergence of a new, highly mutated Covid-19 variant. EU announced temporary ban of flights from South Africa and few EU countries are already under full lockdown scenario. Thus there is fear of this new variant spreading to other countries which might again derail the global economy. Already, there is uncertainty as to when the US Fed will start raising interest rates. So markets might continue to reel under pressure and would actively track covid situation globally.

Moneycontrol News
first published: Nov 26, 2021 10:22 am
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