Sensex, Nifty track global markets, end lower amid Omicron concerns

The benchmark indices ended with minor losses on Thursday amidst selling in some index majors and the cautious approach of investors amidst the Omicron scare. The benchmark Sensex gyrated 431 points and ended the session at 57,794, a decline of 12 points or 0.02 per cent. The Nifty, on the other hand, fell 9 points to end the session at 17,204 a drop of 0.06 per cent.

Analysts said that investors are assessing the risks posed by the spread of Omicron, a hawkish stance by central banks across the globe and surging inflation fuelled by supply chain bottlenecks.

Investors seek solace from multiple studies that claimed that Omicron might not be as lethal as the previous variants. And vaccine efficacy could be higher. However, experts have also warned that since the Omicron variant is more contagious, it could still stress the health system through its spread.

There are also concerns about how long the post covid bull market could sustain. The benchmark Sensex has risen 21 per cent from last year. And from its March lows, it has risen 122 per cent. Foreign investor flows aided by monetary easing, and the influx of new investors had helped the indices more than double from March 2020 levels.

“2021 has been a year of recovery, rehabilitation, and establishing a base for future growth. 2022 will be a little more volatile but will still be very good for equity investors in India. We are likely to be another year of good double-digit returns and continued wealth creation," said Naveen Kulkarni, chief investment officer, Axis Securities.

Analysts said there is a bit of profit-taking after the record gains post covid. 

The US index futures and European stocks rose on Thursday on the back of gains in Wall Street.

Asian markets were mixed as uncertainty loomed over coronavirus-related curbs and restrictions amid a rising number of cases that capped the gains. With coronavirus cases at record highs, some countries are trying to limit the economic damage by restricting travel rather than maintaining complete lockdown.

Covid-19 infections rose by almost a third on Wednesday to 1.73 million. Wednesday was the third consecutive day the world has recorded more than a million new cases in 24 hours.

Going forward, volatility and choppiness are likely to remain high in the coming session.

" We maintain a cautious stance on the markets. Revival in the banking pack will be crucial for the markets. Meanwhile, global cues and upcoming domestic Auto sales numbers will be on the radar. Besides, updates with regards to the rise in Omicron cases in domestic and global markets will be key monitorable. Traders are expected to keep low leverage and hedged position,' said Ajit Mishra, VP, research, Religare Broking.

Share Khan, in a note to investors, said the change in monetary policy stance would create some ripples in financial markets in the initial part of the year. However, like the earlier experience of tapering, the situation is likely to improve as the year progresses and global financial markets adjust to the changing macro environment.

"The year 2022 is likely to be a test for the sustainability of the economic growth momentum in India and the global economy over the next few years. In the absence of liquidity booster dose, growth is expected to be supported by the surge in capital expenditure," the brokerage said.

The market breadth was positive, with 1,785 stocks advancing and 1,584 declining. Around 418 stocks hit their 52 weeks high, and 610 were locked on the upper circuit on BSE. More than half of Sensex constituents declined. Reliance Industries declined 1.94 per cent and fell the most amongst Sensex stocks.