Equity benchmark Sensex plummeted over 1,700 points on Monday afternoon amid scare of Omicron cases rising and FII selloffs.
At 1304 IST, Sensex was trading at 55,236.20, down 1,775.54 points or 3.11 per cent, Nifty was trading at 16,435.80, down 549.40 points or 3.23 per cent.
Finance and banking stocks were the worst affected with Bajaj Finance, Indusind Bank and Tata Steel being the top losers.
Rising inflation, hawkish central banks, exploding Covid cases, sustained selling by FIIs and slowing growth momentum in the developed economies combined to produce the perfect storm that spooked the markets last week, said VK Vijayakumar, Chief investment Strategist at Geojit Financial Services.
"These negative factors persist, causing concerns about further downtrend in the market, particularly if FIIs continue to sell. But negative sentiments are unlikely to last long. Omicron variant, though fast spreading, has not proved to be highly virulent as feared. Also, FIIs will turn buyers soon when valuations become attractive," he noted.
"The tempo got broken when the US Federal Reserve changed its stance along with other global central banks last week. The Omicron variant is also troubling the markets as its transmission is higher than other variants," Saurabh Jain, assistant vice president at SMC Securities in New Delhi told news agency Reuters.
"The fall is also a result of continuous selling by foreign institutional investors. The rollback of liquidity by central bankers will have some kind of repercussions."
Meanwhile, the Nifty volatility index, which indicates the degree of volatility traders expect over the next 30 days in the Nifty50 index, was up 10 per cent.
Markets globally skid with oil prices falling nearly 3 per cent as surging Omicron Covid-19 cases triggered tighter curbs in Europe and threatened to swamp the global economy into the New Year.
(With agency inputs)
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