Sensex, Nifty tank on Omicron fears, weak global cues

The Indian equity markets saw a free fall on Monday, plunging to their lowest level in four months as the spread of the Omicron variant of the coronavirus spooked investors, with weak global cues also weighing on sentiment. The Indian equities markets benchmark indices Sensex and Nifty have slumped more than 11% from their peaks. Technically the markets have now entered the correction zone. This has happened for the first time since March 2020. The markets witnessed panic selling on Monday. The key indices slumped over 3%, leaving equity investors poorer by a staggering Rs 10 lakh crore.

The benchmark Sensex dipped to a low of 55,132.68 points on Monday trade, which is 11.42% down from its high of 62245.43 points reached on 19 October 2021. More than 10% of decline from the peak is referred to as “correction”.

What is causing this massive selloff at the Dalal Street? There are multiple factors. Exploding Covid-19 cases due to the new strain Omicron, rising inflation and sustained selling by the Foreign Institutional Investors (FIIs) are among the key factors driving the markets down. The biggest trigger has come from the renewed Covid-19 pandemic concerns. Covid-19 cases have started rising sharply across the world due to the new strain Omicron. The Netherlands has imposed lockdowns. Several other countries are also putting restrictions and may impose lockdowns ahead of the Christmas and New Year holidays.

The broader Nifty 50 of the National Stock Exchange has also entered the correction zone with more than 10% decline from its peak. The Nifty 50 touched a low of 16,410.20 points, which is 11.79% lower from its all-time high of 18,604.45 points achieved on October 19, 2021.