India stocks drop on reports of fire at biggest vaccine producer

India’s benchmark S&P BSE Sensex reversed gains after climbing above 50,000 points on reports of a fire at Serum Institute of India, the producer of AstraZeneca Plc’s vaccine in the South Asian nation.

The Sensex declined 0.3% to 49,624.76 after climbing as much as 0.8% earlier. The Nifty 50 fell 0.3%.

“The fire at the Serum Institute of India could be the trigger for the sudden plunge,” said Umesh Mehta, head of research at Samco Securities Ltd. “The market is waiting and watching for some negative triggers because of high valuations, and they just need a reason to sell.”

Overseas funds have already poured a net $2.7 billion into Indian equities in January after record purchases last quarter. While prospects of a bounce back in earnings after the economy reopened following coronavirus-triggered lockdowns have driven the benchmark to record highs, some investors have flagged concern that stock prices have run ahead of themselves.

India’s central bank chief this month cautioned of a widening “disconnect” between “certain sections of the financial markets and the real economy.” That came as the nation’s gross domestic product is forecast to shrink the most since the 1950s.

Reliance Industries Ltd. is due to report results for the quarter ended December on Friday.

A fire broke out at an under-construction wing of Serum Institute’s factory in Pune, near Mumbai, NDTV reported. A spokesman for Serum couldn’t be immediately reached. There is no damage to the factory’s vaccine production area, a spokesperson for the local government body, said.

“We will see some bouts of profit-taking in the lead up to the budget reading in February,” said Deepak Jasani, head of retail research at HDFC Securities Ltd.
The Numbers

• Fifteen of the 19 sector sub-indexes compiled by BSE Ltd. fell, with a gauge of telecom stocks falling the most
• Twenty-one of the 30 stocks on the Sensex fell
  • HDFC Bank Ltd. contributed most to the index’s decline, slipping 1.1%; Oil and Natural Gas Corp Ltd. was the biggest loser with a 4% drop -Bloomberg