Indices extend gains for third day as Omicron variant worries recede

The benchmark indices extended their gains for the third consecutive session amid easing Omicron concerns. In the last three sessions, the benchmark Sensex gained 1,493 points and recovered its losses on Monday. The Sensex ended the day’s session at 57,315.28, a gain of 384.72 points, or 0.7 per cent. The Nifty, on the other hand, ended the session at 17,072.60, a gain of 117.15 points, or 0.7 per cent.

Two studies showed that Omicron’s hospitalisation risk is less than the Delta variant. A study from Scotland found that the risk of hospitalisation from Omicron is two-thirds lesser than the earlier variants, although the risk of infection is much higher.

Similarly, a study by a team at Imperial College in London found that patients with Omicron are almost half as likely to need hospital stay.

A University of Oxford study revealed that the third dose of AstraZeneca’s Covid vaccine boosted neutralising antibodies against Omicron.

Markets were on a sticky wicket amid concerns over Omicron, tighter monetary policy, and uncertainty regarding the US fiscal stimulus.

“Markets are taking comfort from their global counterparts, but it will be difficult to extend the rebound amid updates on rising Covid cases. Participants should continue with a cautious approach and focus on stock selection. Apart from information technology, we see select counters from pharmaceutical and fast-moving consumer goods doing well. However, the underperformance of the banking pack remains a worry,” said Ajit Mishra, vice-president-research, Religare Broking.

The slightly higher-than-expected expansion in US gross domestic product also relieved investors, although growth was still at the slowest pace since the second quarter of 2020.

“Participants were enthused over the encouraging US data as inflation worries receded,” said Deepak Jasani, head of retail research, HDFC Securities.

Analysts said the relief rally could continue for some more time.

“Foreign institutional investor selling has reduced sharply over the past few days as they get into the holiday spirit. However, volatility cannot be ruled out on account of the potential risk from the Omicron variant and fragile global cues. We suggest long-term investors take benefit of such volatility in the market and add on to their portfolios gradually at lower levels,” said Siddhartha Khemka, head-retail research, Motilal Oswal Financial Services.

The market breadth was positive, with 2,162 stocks advancing and 1,170 declining on the BSE. Around 268 stocks hit their 52-week highs, and 507 were locked in the upper circuit.

Two-thirds of Sensex stocks ended the session with gains.

PowerGrid Corporation of India was the best performing stock and ended the session 3.4 per cent higher.

ITC and Bajaj Finance rose 2.5 and 2.1 per cent, respectively.

All the sectoral indices on the BSE, barring one, ended the session with gains. Realty and oil and gas stocks rose the most, and their sectoral indices gained 2.2 and 1.5 per cent, respectively.