In line with weak global cues, after sharp gains and Nifty and Bank Nifty both rallying relentlessly, markets have seen correction today by a sharp over 800 points on the Sensex. Nifty Bank another major index also was weak by up to 1 percent, while broader markets comparatively were dragged by a lower quantum in comparison to headline indices.
So, here are the likely reasons for the fall:
Asian indices weak:
Majorly all of the Asian markets barring Straits Times have been trading with a cut, with Japan's Nikkei seeing the highest cut of over 2 percent. The sharp fall can be after the Fed's minutes release which is gearing up to reduce its balance sheet. The faster interest rate hike move shall be taken to offset inflationary impact.
Omicron cases rising fastly in India:
India as per reports has logged over 90,900 new cases in the last 1 day with the daily positivity rate inching higher by 4 percent. .As per the Ministry, 2,135 cases of the Omicron variant have been detected in India, of which over 800 individuals have recovered. Any negative impact of the virus in ways such as economic disruption can once again dampen sentiments.
All but 1 Nifty sectoral indices in red:
All except Nifty Media has been trading in the red, with major weakness on the indices such as Nifty Realty, Nifty financial services and Nifty Private Bank tumbling up to over 2 percent. As per reports, for Bank Nifty 37,000 level acts as support level and 38000-38200 as immediate resistance.
Hawkish Fed minutes:
The Federal Reserve is indicating to be hawkish in its latest minutes while it has not provided any clear timeline of rolling off the nearly $8.3 trillion in treasury's and MBS. Further the statements suggest that the process can be triggered in 2022 in next few months. "Almost all participants agreed that it would likely be appropriate to initiate balance sheet runoff at some point after the first increase in the target range for the federal funds rate," the meeting summary stated.