regular-article-logo Wednesday, 04 October 2023

Sensex slumps 949 points as Omicron spreads in India

Fears grew over the highly transmissible variety leading to a possible third wave thereby denting the recovery seen in recent times

Our Special Correspondent Mumbai Published 07.12.21, 01:45 AM
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The benchmark Sensex plummeted over 949 points to more than a three-month low of 56747.14 as nervousness reigned among investors following reports of more Omicron cases in the country and a crucial meeting of the Reserve Bank of India (RBI) on interest rates that started on Monday.

Investors had initially ignored the impact of the Omicron virus strain but resorted to selling as more cases of the virus popped up across the country with the latest count at 21. Fears grew over the highly transmissible variety leading to a possible third wave thereby denting the recovery seen in recent times.


Though India has seen an upswing in 19 out of the 22 high-frequency indicators, economists remain cautious, pointing to rising inflation and other global headwinds which could threaten the nascent recovery.

The 30-share Sensex began the day in the green at 57778.01 but came under pressure as investors sold IT, banking, consumer and automobile shares. The index fell below the 57000-mark to hit the day’s low of 56687.62 and thereafter ended at 56747.14, plunging 949.32 points or 1.65 per cent. Similarly, the broader Nifty cracked 284.45 points or 1.65 per cent to end below the 17000-level at 16912.25.

All the Sensex stocks ended in the red with IndusInd Bank leading the list of losers. Shares of the private sector lender fell 3.75 per cent. It was followed by Bajaj Finserv, Bharti Airtel, HCL Technologies, TCS, Tech Mahindra and Infosys which ended lower by up to 3.43 per cent.

The broader market was also fragile with both the BSE mid-cap and small-cap indices falling 1.35 per cent each. Among the sectoral indices, the BSE Tech was the biggest loser cracking 2.44 per cent.

The investors were also on alert over the possibility of Chinese property developer Evergrande defaulting on its debt. While the Hang Seng index fell 1.76 per cent, the Nikkei 225 ended lower 0.36 per cent and Shanghai Composite 0.50 per cent.

Analysts said the weakness was also on account of uncertainties on what the monetary policy committee of the RBI will do to tackle the new virus threat and manage inflation concerns.

Markets have factored in a status quo on rates but their attention got rivetted to the central bank’s comments on rising inflation that could lead to an interest rate hike sometime next calendar year.

Further, foreign portfolio investors (FPIs) have continued to press sales, offloading as much as Rs 11,200 crore in December over and above sales of Rs 19,500 crore in the preceding two months.

The enthusiasm of domestic institutions and retail investors is also flagging, putting pressure on equity prices.

“We expect market volatility to remain high until there is clarity on the impact of the new virus. Also, FII selling has been pretty strong adding to the overall market weakness,’’ Siddhartha Khemka, head - retail research, Motilal Oswal Financial Services said.

Omicron also had its impact on the rupee which crashed 33 paise to hit its lowest level in eight weeks. The domestic currency ended a shade away from 75.50 per dollar at 75.45 to the greenback.

The Indian currency opened weak at 75.22 and fell to 75.45 at the end, the lowest closing since October 12.

Dealers say the rupee could remain under pressure till fears of the new variant persist amid FPI outflows.

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