Benchmark indices blindside Omicron variant: Go from red to green

Despite opening the session in red, the benchmark indices ended the session higher as traders looked past the Omicron concerns and latched on to hopes of US stimulus and vaccine efficacy against the new coronavirus variant. The benchmark Sensex ended the session at 57,420 — a gain of 296 points, or 0.5 per cent. The Nifty, on the other hand, ended the session at 17,086 — a gain of 82 points, or 0.5 per cent.  

The Sensex swung 969 points from the day’s lows to highs. But the indices were on the winning side for most of the day. The mood in other equity markets was cautious as investors evaluated Covid concerns.

Last week, the benchmark indices managed to end the session slightly higher on the back of improved sentiment around the Omicron variant. Some studies showed that the Omicron’s hospitalisation risk is less than the Delta variant. Investors were rattled during the first half of the month amidst concerns about rising Omicron cases and sustained foreign portfolio investor selling.

“Despite spiking Covid cases globally, the domestic market took a rebound after its weak opening, factoring in the low mortality rate of the new variant,” said Vinod Nair, head of research, Geojit Financial Services.

Experts have been warning the public against complacency vis-à-vis the Omicron variant and its economic impact.

Last week, top US immunologist Anthony Fauci had urged his countrymen to stay vigilant against the Omicron variant and said the sheer number of cases could overwhelm hospitals, even if its symptoms are less severe.

On Monday, the number of Omicron cases rose to 578 and more states announced night curfew and restrictions.

“Flight cancellations over Christmas revived concerns that the Omicron virus variant could slow the economy, heading into the New Year,” said Deepak Jasani, head of retail research, HDFC Securities. 

Over the weekend, China’s central bank promised greater support for its economy and said it would opt for more proactive monetary policy tools.

The People’s Bank of China announcement comes when central banks of other major economies prioritise fighting inflation over monetary support. Over the last few weeks, a bunch of inflation data has forced major central banks to reconsider their assessment of inflation as transitory.

Analysts said triggers that could move markets are unlikely until the end of the year. 

“Third-quarter results season and build-up to the upcoming Budget session will be key events that the market will be looking for in January,” said Siddhartha Khemka, head of retail research, Motilal Oswal Financial Services.

The market breadth was positive, with 2,091 stocks advancing against 1,389 declining on the BSE. More than two-thirds of the Sensex stocks gained. Tech Mahindra was the best performing Sensex stock and ended the session 3.6 per cent higher.

The shares of RBL Bank tanked as some top management changes during the weekend worried investors. But it cut its losses after the Reserve Bank of India said the lender’s financial position was satisfactory.