UBS said “New flare-ups of Covid infections [both ongoing and yet coming] in India, and particularly the emergence of new Covid strains against which currently available vaccinations provide little or no protection are probably the biggest downside risk,”. The problem with new variants is that they force governments to put back in place mobility restrictions which were rolled back in an attempt to give impetus to recovery.

Markets and governments have not reacted too kindly to reports of the new Coronavirus variant ‘omicron’ which was identified in South Africa. The 'potentially more contagious' variant has been detected in Germany, Belgium, Hong Kong, and Israel so far. Countries like Australia, Brazil, Canada, a few in the European Union, Iran, Japan, Thailand, and the US have imposed restrictions on various southern African countries after the new variant was detected.

Stock exchanges have been taken over by the bears once again, in a manner reminiscent of the plunge seen back in March 2020 at the climax of the pandemic. Indian Sensex and Nifty on Friday lost 1,687 points and 510 points, respectively.