Indices snap two-day winning streak amid profit-booking, Omicron scare

The benchmark indices ended a volatile session on Wednesday lower, snapping their two-day gaining streak due to a mix of profit-booking and Omicron concerns. The benchmark Sensex ended Wednesday's session at 57,806.5 - a decline of 91 points, or 0.2 per cent. The Nifty, on the other hand, ended the session at 17,213.6 - a decline of 19 points, or 0.1 per cent.

India's overall tally of Omicron cases rose to 781 on Wednesday. On Wednesday, the World Health Organization said Omicron poses a "very high" risk and could strain health care systems. The new variant led to record outbreaks in many countries. The emergence of Omicron has revived worries about the economic impact of the pandemic as governments across the globe placed more restrictions to rein in the spread.

Further, analysts said there is a bit of profit-booking on investors after yet another year of record gains. Apart from Covid-19, a hawkish stance by central banks is another headwind investors are bracing for in the next year. A slew of inflation data in the recent past had forced central banks across the globe to prioritise fighting inflation after terming it as 'transitory' until last month. 

"Markets took a breather after the recent rebound and ended marginally lower in a lacklustre session. After the initial uptick, the benchmark drifted gradually lower and traded range-bound after that. However, movement on the broader market front kept traders busy till the end," said Ajit Mishra, vice-president-research, Religare Broking.

Going forward, analysts said investors should be cautious due to Omicron and interest-rate concerns. But at the same time, there is enough to cheer as the economy seems to be in recovery mode. 

"The scheduled monthly expiry of December month derivatives contracts will keep the volatility high. The banking pack is still struggling, and its performance will be critical to the next directional move. In the absence of any event, updates on Covid cases will remain on participants' radar. Keeping in mind the scenario, we suggest continuing with a stock-specific trading approach," said Mishra.

The market breadth was positive, with 2,053 stocks advancing and 1,334 declining. Six hundred and nineteen stocks hit the upper circuit, and 413 hit their 52-week high. Eighteen Sensex stocks declined. State Bank of India declined the most among Sensex constituents and ended the session 1.5 per cent lower. ITC declined 1.4 per cent.

A dozen sectoral indices on the BSE declined. Metal stocks fell the most, and its sectoral index on the BSE declined 1.01 per cent. 

Pharmaceutical (pharma) stocks were in demand on Wednesday. Antiviral Covid pill Molnupiravir got the Indian drug regulator's nod on Tuesday and will be manufactured by 13 Indian drugmakers. 

"Outweighing weak sentiments in most sectors, the pharma sector aided the domestic market to close on a flat note with a positive bias," said Vinod Nair, head of research, Geojit Financial Services.