OMICRON TO KEEP MARKETS ON THE EDGE IN LAST WEEK OF 2021
MUMBAI: Indian stock markets on Friday managed to recoup losses from the start of the week, but analysts said the Omicron coronavirus variant is likely to keep markets volatile going into the last week of the year. On Friday, benchmark indices Sensex and Nifty broke their three-day positive streak to end 0.33% and 0.4% lower at 57,124.31 and 17,003.75, respectively. But both indices closed marginally above last week’s closing.
On Monday, the indices had crashed more than 2% over concerns on Omicron’s spread and fears that many countries may bring back stringent restrictions to contain the spread of the virus. “The three-day rally was broken as worries of the Omicron variant spread and concerns of a fresh lockdown triggered nervousness among investors. Trading set up suggests that before a fresh breakout, the index is likely to consolidate within the range of 16,800 to 17,250 levels,” said Amol Athawale, deputy vice-president technical research, Kotak Securities Ltd.
Brokerage firm Motilal Oswal believes that while the relief rally seen this week may continue for some more time, volatility cannot be ruled out on account of potential risks from the Omicron variant and fragile global cues. India recorded 122 cases of Omicron in a span of 24 hours, the highest in a day so far, pushing its tally to 358.
The cases have been detected across 17 states and Union territories so far. Maharashtra has recorded the highest number of 88 cases of Omicron, followed by Delhi with 67, Telangana 38, Tamil Nadu 34, Karnataka 31 and Gujarat 30.
A study by IIT Kanpur noted that the third wave of coronavirus in India could peak on 3 February 2022. After around 10% correction, Nifty is now trading at 19x FY23 P/E and is no longer in the expensive zone, Motilal Oswal said.
Markets are also expected to find some respite as foreign institutional investor (FII) selling has seen a slowdown.