Omicron Fear and FII Sell Ghost Stock Markets, Indices Drop More Than 2%

Benchmark stock market indices fell more than 2% Monday on fears that the Omicron variant of the Corona virus is gripping the global economy and FIIs scaling back to profit.

The S&P BSE Sensex fell 1,189.73 points or 2.09% to 55,822.01 points. The decline was across the board and the top Sensex losers included Tata Steel at 5.20%, IndusInd Bank at 4.23%, SBI at 3.97%, Bajaj Finance at 3.89% and HDFC Bank at 3.14%.

The NSE Nifty-50 index also fell 371 points or 2.18% to 16,614.20.

The drop was up to 3% on both exchanges during intraday trading. However, the recovery in the selected index majors resulted in some losses in the second half.

At current levels, indices have hit a 4-month low, analysts said.

Vinod Nair, Head of Research at Geojit Financial Services said: “India has been going through a phase of consolidation over the past two months. Currently, the sell-off is the result of the rapid increase in FII sales caused by the aggressive policies of the world’s central banks, the cautious view of the Indian market due to its high valuation compared to peers and the decline in the influx into retail.”

“We feel we are reaching the final stage of this consolidation in terms of price correction. Some pockets have become fair, but the general market is still trading predominantly, which will continue to affect the performance of the broad market in the near term,” he said.

Mr Ajit Mishra, VP – Research, Religare Broking Ltd said: “Markets reacted to news of a sharp jump in global COVID cases, which could lead to a lockdown. While the domestic situation is currently under control, any impact on the global economic recovery will also affect our outlook.”

“In addition, the continued outflow from the foreign fund weighed on sentiment. We reiterate our cautious view on the markets and propose to focus more on risk management,” he added.