Negative bias to remain in next few days

Indian markets logged their second-worst week in almost 10 months amidst weak global cues, rising Omicron cases and continued foreign institutional investors (FII) selling. All-round selling was seen in the market barring IT stocks.

Nifty and Sensex tanked 3 per cent each to finally close at 16,985/57,011, respectively. Broader markets fell more severely with Nifty midcap 100/ Nifty smallcap 100 down 4.1 per cent and 3.6 per cent respectively.

All sectors except IT, which was up 2 per cent, ended in the red. Realty, media and public sector undertaking banks were the biggest losers – down approximately 8 per cent, followed by private banks, financials and FMCG which were down 4-5 per cent.

FIIs have been selling continuously in the past two months and have sold almost Rs 90,000 crore in the last two months. Domestic institutional investors, on the other hand, have provided support to the market by having bought equities worth more than Rs 50,000 crore during the same period.

Globally, markets saw sell-off as central banks across the world are tightening their monetary policy while uncertainties over the impact of the fast-spreading Omicron variant continue to hover.

Surprise rate-hike by the Bank of England dented sentiments, even though US Fed had maintained the status quo a few days earlier. In addition, geopolitical tensions between China and the US flared again, thus adding to the negativity. Oil prices too weakened as surging cases of the Omicron Covid-19 variant raised concerns over the oil demand.

India markets too witnessed selling pressure in line with weak global cues. Nifty plunged below 17,000 levels while Sensex fell to around 57,000 levels. IT stocks were in limelight this week given the depreciating rupee where USDINR closed near a 20-month high at 76 while Accenture reported strong quarterly numbers and raised its earnings guidance too.

Overall, the market remains in a tight range with a bearish undertone as selling pressure is intact at higher levels. Negative global cues, continued FII selling, absence of any positive trigger and increasing cases of Omicron is likely to continue putting pressure on the market.

Thus traders are advised to maintain their negative bias in the market for the next few days. Next week market would eye China’s monetary policy outcome along with GDP data from US and UK.

(The writer is Head - Retail Research, MOFSL)

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