Market down 10% from October peak
Negative global cues led to more than 2 per cent fall in Nifty-50 and Sensex, extending the ongoing correction to around 10 per cent from the peak in October 2021.
The spread of Covid variant omicron in Europe forcing complete lockdown in the Netherlands, along with other adverse news from the US like lower GDP growth forecast for 2022 and opposition to Biden's $1.75 trillion domestic investment bill, shattered investors sentiments and led to widespread selling.
The Sensex fell 1189.3 points or 2.09 per cent to 55822 and is now down over 2000 points or 3.63 per cent in the last two sessions, wiping out Rs 11.45 lakh crore of investors wealth.
BSE's market capitalisation fell by 6.79 lakh crore on Monday alone to Rs 252.57 lakh crore.
The Nifty-50 Index fell 371 points or 2.18 per cent to 16,614.20.
After a gap-down opening on a weak Asian market, Sensex and Nifty-50 were down 3 per cent by 1 pm but recovered partly on late buying.
"Global markets were deep in the red as investors are worried over surging omicron cases with tighter restrictions in certain European countries, potentially damaging the region’s economic recovery. The Netherlands went into a full lockdown on Sunday, until at least January 14, providing a lead to several other European governments. Further, Goldman Sachs trimmed its US Q1 CY2022 GDP forecast sharply after a US senator withdrew his support to US President Joe Biden's $1.75 trillion domestic investment bill, thus dampening the overall sentiments," said analysts.
"Markets have corrected by close to 10 per cent 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," said Siddhartha Khemka, headretail research, Motilal Oswal Financial Services.
The broader market fell even more with the BSE Mid-cap Index down by 3.42 per cent and the Small-cap down by 3.31 per cent.
FPIs were sellers by Rs 3,565.3 crore while the domestic institutions were net buyers by Rs 2,764.02 crore. NSE's India VIX index gained 16.08 per cent, indicating high volatility.