The news of the new covid variant has hammered confidence in equities, which were already under pressure as traders prepared for the Federal Reserve to start tightening its monetary policy to fend off surging inflation.
“Just as this particular tail risk was melting away into the background, scientists in South Africa have announced they have discovered a new Covid variant which could potentially be more transmissible.
In Indian markets, autos, banks and energy stocks were the worst hit in early trading in Mumbai, with the sub-indexes down between 1.5% and 1.7%.
The new variant should not be a great matter of concern for us and we suggest investors with suitable risk appetite to consider and start allocating money into markets who have missed the rallies,” said Prashant Tapse, Vice President at Mehta Equities.
The number of daily infections in South Africa has increased tenfold since the start of the month.
The WHO said it is “closely monitoring” the reported variant and is expected to meet on Friday to determine if it should be designated a variant of “interest” or of “concern”.