Sensex sinks 1,200 pts on global selloff over Omicron – Times of India

MUMBAI: A global selloff — triggered by the spread of the Omicron variant of the Covid virus, last week’s US Fed decision to end its easy money policy by March and the recent move by the Bank of England (BoE) to raise interest rate — led to the sensex crashing nearly 1,200 points by close of Monday’s trade. Reliance Industries and financial stocks led the decline. In mid-session, the sensex was down nearly 1,900 points, but a pull-back rally helped it close at 55,822 — a loss of 1,190 points or 2.1%. The day’s close was a fourth-month low for the sensex.
Last week, the US Fed had said it would end its bond-buying programme, which was started in early 2020, by March 2022. The US central bank added that it would raise interest rates at least thrice next year, from almost zero level now. Also last week, in a surprise move, the BoE raised interest rate. This left investors around the globe jittery as the decision could lead to a situation of competing increase of rates among countries. Combined with it, the fast spread of the Omicron variant and its impact on markets and economies around the globe is making investors cautious, market players said.

According to Kotak Securities head (equity research – retail) Shrikant Chouhan, the selloff in the domestic market “continued across the spectrum on weak global cues weighed down by factors such as rising Omicron cases in the West, rate hikes by several central banks in Europe and the US Fed also signalling its intent to undertake rate hikes next year to cool down inflationary concerns”. The short-term outlook for the market is still negative but, due to the oversold situation, there is a strong possibility of a meaningful pull-back rally, he said.
The day’s selloff left investors poorer by nearly Rs 7 lakh crore with the BSE’s market capitalisation now at Rs 255.5 lakh crore. At the current level, India’s mcap is about Rs 18 lakh crore off its all-time high level of Rs 273 lakh crore, official data showed. The slide in investors’ wealth has come despite several new listings in the recent months like Nykaa, Paytm and Policybazaar, which have together added over Rs 4 lakh crore to BSE’s mcap.
Like in the last few weeks, Monday’s selling was again led by foreign funds that recorded a net outflow of Rs 3,565 crore. So far in the month, foreign portfolio investors (FPIs) have net sold stocks worth over Rs 19,100 crore, data from CDSL and BSE showed. Tuesday could witness another session of losses as the leading markets in the US opened deep in the red. The government bond market also saw strong selling on Monday with the benchmark 10-year gilt yield closing at 6.44%, a 21-month high, bond dealers said. The selloff came amid rising concerns about inflation, they said.