Stocks end lower: markets spooked as Omicron reaches India
10:59, 3 December 2021
India’s benchmark equity indices ended today’s trading lower, reversing early gains as investors chose to book profits amid weak market undertones.
Power Grid Corp of India topped the list of today’s fallers on the index with a 3.9% fall to INR206.1, followed by heavyweight Reliance Industries, which reversed opening gains to close 3% lower at INR2,408.5. Kotak Mahindra Bank gave up earlier gains to close 2.5% lower for a second day at INR1,914.2.
Fertiliser maker UPL Limited rose the most today, clocking 2% gains, followed by oil retailer Bharat Petroleum which was up 1.8%.
The National Stock Exchange’s 50-share Nifty50 index closed 1.18% weaker at 17,196.7 points, while the S&P BSE 30-share Sensex contracted by 1.31% to close at 57,696.4 points.
The advance-decline ratio on the NSE stood at 977-858.
“Index closed a week at 17197 with gains of more than one percent and formed a doji sort of candle pattern on weekly chart after two bearish candles which hint indecision in the markets. Good demand zone for nifty is already formed near 17100-17000 zone and holding above said levels. One can expect index to march towards 17500-17600 zone in near term but if failed to hold then more profit-booking can push index to much lower levels, immediate hurdle is coming near 17300-17440 zone,” said Rohit Singre, a senior technical analyst at LKP Securities in Mumbai
The markets have been weighed down after two cases of the Omicron variant of the Covid-19 virus were detected in the southern state of Karnataka on Thursday. Investors have chosen to book profits, or avoid taking fresh positions, due to the evolving situation regarding the new variant.
“Markets remained cautious during the week with marginal gains. The focus seems to be shifting from premium Indian equities to relatively cheaper markets. The result season was mostly divided with companies showing strong signs of demand growth but at the same time, high raw material and input cost adding pressure on margins. Companies have begun passing on price hikes to consumers to save their margins,” said Shrikant Chouhan, head of equity research (retail) at Kotak Securities Ltd.
Sun Pharma shares gave up early gains even after the company announced that it had signed an agreement with Biomodifying LLC granting Sun Pharma an exclusive licence for Biomodifying’s intellectual property, along with antibodies developed for multiple uses including for cancer. Sun Pharma ended 1.7% lower at INR753.
Biocon Pharma, a subsidiary of Biocon, received approval of its ANDA (Abbreviated New Drug Application) for mycophenolic acid from the US Food and Drug Adminstration, expanding the company’s portfolio of complex drug products. Shares in Biocon Pharma ended 0.1% lower at INR367.
Two-wheeler maker Hero MotoCorp said it has expanded operations in Argentina along with Gilera Motors. The company’s shares ended little changed at INR2,462.85.
“Following a positive opening, benchmark indices gave up all gains led by losses in heavyweights in anticipation of the RBI meet next week. Meanwhile, investors were also cautious after India reported Omicron cases,” said Vinod Nair, head of research at Geojit Financial Services.
“However, global equities traded with slight gains, recovering from yesterday’s broad-based sell-off led by fears on new Covid variant and Fed chair’s comment on the bond-buying program. RBI’s monetary policy meeting will be a key market driver as investors await MPC’s policy decision, which is broadly expected to hold an accommodative stance considering the uncertainty surrounding the new variant,” Nair continued.
Markets await data
Investors across currency and stock markets are awaiting the US non-farm payrolls report, which will set the course for the coming week. Markets are already reeling under pressure after the US Federal Reserve earlier this week said that its tapering programme may end sooner than had been anticipated.
“This week Omicron woes kept the USDINR spot afloat, and now the focus is on tonight’s US non-farm payrolls report. It is a big data to digest before the Fed policy as it will help gauge the state of US employment and will carry some implication on this policy outcome,” Emkay Global Financial Services said in a note.
“A big NFP figure will push USDINR higher, along with the safe-haven demand, if Omicron concerns rise. But next week we have RBI policy, and a likely tightening by raising the reverse repo rate may limit any rise in USDINR spot. So we expect USDINR spot to continue oscillating in between 74.70-75.50. As long as it trades above 74.70, it will continue the uptrend,” the note added.
Read more: Indian stock markets end higher on robust economic data