Markets to move according to Omicron, FIIs and global cues this week, say analysts

Following the spreading of the COVID-19 variant Omicron, market analysts are now expecting the week’s market movement to be surrounding the same. According to analysts, domestic equities will be mainly driven by global market trends, foreign institutional investors' movement and developments around the new COVID strain spread. Market observers also noted that the trade markets have been under pressure due to the outbreak.

Markets traded under pressure last week following weak global cues, they observed. The analysts also noted that the overall investor sentiment remained downbeat throughout the week. Earlier, the US market suffered a significant drop following the Omicron variant’s spread causing tension among other market investors.

Analysts says volatility will continue, urges to follow FII activity to assess trends

"Global markets, Omicron variant, dollar index and FIIs' behaviour will be key factors to drive the market this week," said Santosh Meena, Head of Research, Swastika Investmart Ltd as cited by PTI. Meanwhile, the expert researcher also noted that the US Federal Reserve's announcement that it will end bond-buying from March was a major event last week. "The selling can be attributed to hawkish Fed, rising worries of Omicron, rupee weakness, and most importantly relentless selling by FIIs," Meena added.

Ajit Mishra, VP Research, Religare Broking noted that the volatility in the market will continue due to the uncertainty around the Omicron spread. "In absence of any major event, global cues will dictate our market trend. Participants are keeping a close watch on the COVID-19 situation due to the new variant and related updates will continue to induce volatility in days to come," Mishra said. Siddhartha Khemka, Head - Retail Research, Broking & Distribution, Motilal Oswal Financial Services Ltd. reiterated the same by stating, "negative global cues, continued FII selling, absence of any positive trigger and increasing cases of Omicron are likely to continue putting pressure on the market."

The comments and observations from market analysts come after the BSE benchmark tumbled 1,774.93 points or 3.01 per cent during the last week. The Sensex plummeted 889 points on Friday in line with a selloff in global markets following the rise in Omicron cases. Yesha Shah, Head of Equity Research, Samco Securities noted that the investors must look at FII activity to assess trends. "In the absence of major domestic events, the market will seek indications from global indices and macroeconomic data, such as the US GDP growth rate, to decide its movement. As global macros are expected to dominate, investors should keep an eye on FII activity to assess trends and stick to a stock-centric investing strategy in the midst of range-bound index moves," Shah said as cited by PTI.

With PTI inputs

Image: PTI