Sensex falls over 1,400 points; Nifty Plunges 2% Amid Omicron Fears; what should investors do

Sensex and Nifty, Indian equity benchmarks fell on Monday as rising number of Omicron Covid-19 cases threatened economic recovery across the globe. Sensex fell 1,434.03 points to end the day at 55,577.71, while Nifty was trading near 16,600, down over 2 per cent. Indian investors lost Rs 11 lakh crore as stock markets continued to fall amid a global sell-off.

Bajaj Finance and IndusInd Bank were the major losers. Bajaj’s twins each declined 4.3 per cent, while IndusInd Bank declined 3.8 per cent. Axis Bank, SBI, Kotak Bank, HDFC Bank and HDFC fell over 3 per cent each. In the broader markets, AU Bank and Bandhan Bank were down 9 per cent and 6.3 per cent, respectively. Tata Steel was the other major loser in the Sensex 30, followed by Mahindra & Mahindra, NTPC, Larsen & Toubro, ITC, UltraTech Cement. Nykaa, PolicyBazaar, Tega Industries, Tarsons Products and seven other recently listed stocks hit a new all-time low on December 20. BSE Midcap and Smallcap were down over 3 per cent each.

Global Market Crash:

Several parts of Europe announced a fresh lockdown to prevent the spread of COVID-19 amid the emergence of the Omicron version. The Netherlands imposed a lockdown before Christmas. After days of record highs, the number of fresh COVID-19 cases in the United Kingdom reached 90,418 on 19 December. This rapid increase in Covid-19 cases has left investors restless.

Shares in other Asian markets fell amid Omicron fears. MSCI’s broadest index of Asia Pacific shares outside Japan was down 0.9 per cent at last count. Japan’s Nikkei 225 lost 1.7 per cent, China’s Shanghai Composite 0.8 per cent and Hong Kong’s Hang Seng lost 1.3 per cent. South Korea’s KOSPI was down 1.5 per cent and Singapore’s Straits Times was down 1 per cent.

Three major Wall Street indices fell last week amid Omicron fears. However, gains in technology stocks provided some support, limiting the Nasdaq Composite’s loss to 0.1 percent. On Friday, the S&P 500 and the Dow Jones closed down 1 per cent and 1.5 per cent, respectively.

Sensex fell over 2%. What should investors do now?

“Last week saw a correction of around 3 per cent due to several factors like rate hike by Bank of England, steady increase in the number of Omicron cases across the world and selling by FIIs. All sectors faced the heat of a market correction which may continue for quite some time as global cues suggest. However, the coming week will see some good action in the primary market as five IPOs make their debut and India’s largest cash management company CMS Info Systems will start its IPO subscription this week. On the technical front, the immediate support and resistance for Nifty 50 are at 16,700 and 17,250 respectively. 35,000 and 36,450 levels will act as support and resistance in case of Bank Nifty,” Mohit Nigam, Head – PMS, Hem Securities said ahead of market opening on Monday.

For investors, Manish Hathiramani, Proprietary Index Trader and Technical Analyst, Deen Dayal Investments, said, “Friday’s lows were a ray of hope, but this morning the index opened with a gap that strengthens the validity of a downtrend. The upside for the index has been narrowed down for the time being and each rally can be used to short this market for a target of 16,400.”

Rupee also fell

“The rupee also fell against the US dollar as Omicron cases threatened the economy. The US dollar was trading with marginal gains against the basket of currencies in Asian trade this morning. Technically, if the Dollar index trades above the $96.50 level, it could see a rise to the $96.80-$97.10 level. The support area is located at the $96.40-$96.12 level. The euro, sterling and yen were flat on Monday morning,” said Sriram Iyer, senior research analyst at Reliance Securities.

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