Indices snap three-day winning streak but end with weekly gains

The indices snapped their three-day winning streak on Friday but managed to close the week slightly higher.

The benchmark Sensex ended the latest session at 57,124, down 191 points or 0.3 per cent. But it managed to end the week 112 points higher. The Nifty, on the other hand, ended Friday's session at 17,003.75, following a decline of 69 points or 0.4 per cent.

Vacillation marked the latest trade as the Sensex swung 810 points from the day's highs to lows. Banking stocks were the biggest drag on the index and contributed most to the decline. Analysts said that traders preferred to book profits as uncertainty around Omicron continued.

This week many states have come out with restrictions for Christmas and NewYear celebrations as the number of Omicron cases rose. As of Friday, India had 358 Omicron cases across 17 states and Union Territories.

“Weighed by muted global markets and continued FII selling, domestic indices erased their mid-day gains to slip into the red, led by selling pressure on index heavyweights. The markets remain highly volatile amid rising Omicron cases, tighter monetary policies, and inflationary woes,” said Vinod Nair, head of research, Geojit Financial Services.

Some easing of concerns around the Omicron variant and hopes of a US stimulus helped the markets recover from its losses this week. Studies showed that Omic­ron’s hospitalisation risk was less when compared with the Delta, they cautioned that the variant could still produce serious cases.

News on vaccine efficacy against the variant boosted sentiment. And reports about US President Joe Biden striking a deal with lawmakers to pass his $2-trillion economic package also cheered investors.

Covid concerns, the hawkish turn by central banks to fight inflation, and sustained FPI selling had rattled investors last week.

 Inflation numbers had forced major central banks to announce their plans to taper their monthly bond purchases, and the Bank of England announced its decision to hike rates. The sudden change of stance by central banks which until recently termed inflation as transitory caught investors by surprise. The Chinese central bank's decision to lower benchmark rates for the first time in 20 months failed to strike a chord with investors. The aggressive bond purchase programme and the near-zero interest rates by the US Federal Reserve had helped foreign fund flows to emerging markets, including India, and enabled a rally in the equity markets.

"Favourable global cues led to a firm start but profit-taking at higher levels trimmed all the gains in no time and pushed the benchmark lower. The markets are closely eyeing the Covid situation. Any positive news could only help the index make sustainable up-move, else volatility will continue,' said Ajit Mishra, VP-research, Religare Broking.

The market breadth was negative, with 1,823 stocks declining against 1,497 advancing on the BSE. More than two-thirds of Sensex stocks fell. NTPC was the worst-performing Sensex stock and ended the session 2.7 per cent lower. Barring two, all the sectoral indices on the BSE declined. Power stocks slumped the most, and its gauge fell 2.04 per cent.