Rising inflation, hawkish central banks, exploding Covid cases caused by the Omicron variant, sustained selling by FIIs and slowing growth momentum in the developed economies combined to produce the perfect storm that is spooking the market, said analysts.
“These negative factors persist, causing concerns about further downtrend in the market, particularly if FIIs continue to sell. But negative sentiments are unlikely to last long. FIIs will turn buyers soon when valuations become attractive. Retail investors can use the corrections to buy high quality stocks, particularly financials, whose valuations have become attractive,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Equity investors were left poorer by Rs 5.19 lakh crore as their wealth reflected in total market cap of BSE listed firms slid to Rs 254.08 lakh crore.
How are bluechips doing
After opening in the red, benchmark indices fell further lower. At 9.31 am, BSE flagship Sensex was down 1,072 points, or 1.82 per cent, to 55,939. NSE benchmark Nifty declined 325 points, or 1.92 per cent, to 16,960.
“On the technical front, immediate support and resistance for Nifty50 is at 16,700 and 17,250, respectively. In case of Bank Nifty, the level of 35,000 and 36,450 will act as support and resistance,” said Mohit Nigam, Head – PMS, Hem Securities.
In the 50-share pack Nifty, Cipla was the biggest gainer, up 2.17 per cent. Power Grid was among other gainers.
JSW Steel was the top loser in the pack, down 4.08 per cent. Tata Steel, Bajaj Finance, M&M, SBI, Tata Motors, BPCL, Hindalco Industries and Grasim Industries were other stocks that traded in the red.
FACTORS DRIVING MARKETS
Dollar at a high: US Federal Reserve officials openly spoke of hiking rates as soon as March and of starting to run down the central bank’s balance sheet in mid-2022. The Fed’s hawkish turn, combined with safe-haven flows, underpinned the US dollar index near its best for the year at 96.674, following a 0.7 per cent jump on Friday.
Virus threat intensifies: US health officials urged Americans on Sunday to get booster shots, wear masks and be careful if they travel over the winter holidays, as the Omicron variant raged across the world and was set to take over as the dominant strain in the United States.
Lockdown in Europe?: The possibility of more COVID-19 restrictions being imposed ahead of the Christmas and New Year holidays loomed over several European countries as the Omicron variant spread rapidly. The Netherlands has already announced a lockdown.
Broader markets
Broader market indices were trading lower, underperforming their headline peers in morning trade. Nifty Smallcap was down 3.24 per cent while Nifty Midcap fell 3.09 per cent. Broadest index on NSE, Nifty 500, was down 2.22 per cent.
Zee Entertainment was a gainer from the space while AU Small Finance Bank, Astral Pipes, Adani Total Gas, Firstsource Solutions, Birlasoft and CDSL were under selling pressure.
Global markets
Chinese blue chips dipped 0.4 per cent, while MSCI’s index of Asia-Pacific shares outside Japan fell 0.8 per cent. Japan’s Nikkei dropped 1.7 per cent and South Korean stocks 1.2 per cent.
S&P 500 futures shed 0.8 per cent and Nasdaq futures almost 1 per cent. EUROSTOXX 50 futures lost 1.1 per cent and FTSE futures 1.0 per cent.
Read More:Equity investors lose Rs 5.2 lakh crore within 15 mins in market crash
