China Covid tsunami sinks stock markets; pharma rises for windfall hopes

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Photo credit Twitter Mansukh Mandaviya

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By S Jha

New Delhi, December 21: The Indian stock markets went into a freefall after Union Minister for Health and Family Welfare Mansukh Mandaviya called an emergency meeting after the Covid-19 tsunami woke up the world to the existing pandemic threat. The foreign institutional investors led the sell out on the bourses, which sank to lows after the government asked the state governments to take measures to tame the pandemic.

Adani Enterprises was hammered in the bloodbath, losing over six per cent, as panicked investors sought to book their profits in runaway stocks. Adani Enterprises since the outbreak of the pandemic in 2020 has multiplied several times, rising from the level of Rs 80 to Rs 4000 in less than two years. Metal stocks bore the brunt of the Covid-19 panic, as Hindalco led the pack to the lower levels. The runaway midcap and smallcaps were also dragged in the bloodbath. The volatility index rose sharply to over 15 per cent, which is known as a nightmare for the traders.

In the last half an hour, the domestic institutional investors heavily bought into the equity market, as part of their bargain hunts to save the indices from slipping deep into the red. The DIIs had a net buy of Rs 1757 crores, while the FIIs sold equities worth Rs 1119 crores. It has been seen that the DIIs buy into a falling market, while the FIIs buy into a rising market.

Divi’s Laboratory led the pharma rally in the bourses, gaining almost five per cent. This scrip has been bearish this year, having lost almost 23 per cent. Apollo Hospital too rose sharply to gain over three per cent. Cipla and Sun Pharma were also strongly positive. The healthcare pack, as had been the case at the time of the Covid-19 outbreak, rose sharply amid the China pandemic inducing panic among the investors.

Besides pharma, IT pack was also strong, which is also in line with the pandemic trend in the equity market, with hopes that a revival of the Covid-19 scare will bring more business to the companies with digitalization push.

Adani Ports, Maruti, Indusind Bank, Tata Motors were losers from among the heavyweights on the indices. Nykaa, Adani Green, Ambuja Cement, Adani Transmission from among the midcaps lost heavily.

Madras Fertilizer, Salasar Technology, sugar and hotel stocks, PNB Housing Dynamic Cable were some of the smallcaps which were hammered in the equity bloodbath on Wednesday. The stock markets have turned bearish to sideways for the technical chartists, and investors may need to tighten their belts for the next few days.

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