Manic Monday: Omicron scare and rate hike fears give markets the jitters; post biggest fall in 8 months

The biggest losers on Nifty100 were Bandhan Bank (-7.7%), InterGlobe Aviation (-7%), BPCL (-6.4%), DLF (-6%) and Indus Towers (-5.8%).

The overall market breadth remains negative and would require strong positive triggers for changing the current negative trend.
The overall market breadth remains negative and would require strong positive triggers for changing the current negative trend.

The domestic equity markets registered their biggest intra-day fall on Monday in the last eight months. While the Nifty50 has corrected more than 10% from October high, the Sensex is little short. Bank Nifty is down 16.5% from its October peak of 41,238 points. The biggest losers on Nifty100 were Bandhan Bank (-7.7%), InterGlobe Aviation (-7%), BPCL (-6.4%), DLF (-6%) and Indus Towers (-5.8%). Investors lost Rs 6.80 lakh crore of their wealth on Monday as the market capitalisation of BSE listed companies dropped to Rs 252.58 lakh crore from Rs 259 lakh crore in the previous session.

India VIX – the fear gauge of the market – surged more than 16% in the session on Monday amid a broad-based sell-off. Persistent selling from foreign portfolio investors amid concerns over interest rate hikes and emerging virus cases has led to volatility in the markets, market experts said. So far, in December, FPIs have sold shares worth more than Rs 17,000 crore as rich valuations and the emergence of the new variant of the coronavirus spooked investor sentiment.

The 30-share Sensex ended 1,189.73 points or 2.09% lower at 55,822.01 with only two advances against 28 declines in the index. Similarly, the Nifty50 closed at 16,614.20, down 371 points or 2.18%. Tata Steel was the top loser among the Sensex pack, which fell 5.2%. Others like IndusInd Bank, SBI, Bajaj Finance, HDFC Bank and Kotak Mahindra Bank also saw sharp cuts. On the flip side, shares of Hindustan Unilever and Dr Reddys Labs ended among the gainers on Monday, adding up to 1.7%.

Siddhartha Khemka, head – retail research, Motilal Oswal Financial Services, said: “Markets have corrected by ~10% from their peak driven by consistent FIIs selling, tightening monetary policy by central banks globally and concern over economic recovery due to rising omicron cases. The overall market breadth remains negative and would require strong positive triggers for changing the current negative trend.”

Amid the broad-based sell-off, all sectors in the market ended with losses. The Bank Nifty fell 3.3% on Monday, whereas the PSU Bank index fell 4%. The broader BSE mid-cap and small-cap indices also mirrored the headline indices, falling up to 3.4%. The overall advance/decline ratio turned broadly negative as nearly 2,699 counters declined and only 746 scrips advanced in the BSE on Monday.

Elsewhere in Asia, too, the markets ended with significant losses amid rising concerns over the Omicron variant of the virus leading to tighter restrictions. Japan’s Nikkei 225 fell 2.13%, Hong Kong’s Hang Seng fell 1.9%, and China’s Shanghai Composite ended 1.07% lower on Monday. “Asian share markets fell and oil prices slid on Monday as surging Omicron cases triggered tighter restrictions in Europe and threatened to drag on the global economy into the new year,” said Deepak Jasani, head of retail research, HDFC Securities.

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