Volatile week likely

New Delhi: Stock markets are expected to see volatility this week due to potential risk from Omicron variant and monthly derivatives expiry, say analysts.

"Markets will continue to see volatility and whipsaw-like movements as they respond to Omicron-related development and the monthly expiry," said Yesha Shah, head (equity research), Samco Securities.

Ajit Mishra, V-P (research), Religare Broking Ltd, adds: "Markets are closely eyeing the Covid situation and any positive news could only help the index make any sustainable up move else volatility will continue."

Investment trend of foreign investors, movement of the rupee and Brent crude would also be crucial for markets direction.

"While the relief rally might continue for some more time, volatility cannot be ruled out on account of potential risk from Omicron variant and fragile global cues," said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd. The BSE benchmark gained 112.57 points or 0.10 per cent in the last week.

"The Indian market has been undergoing a phase of consolidation for the past two months, which we believe is reaching its last phase in terms of price correction. Going forward, the market will continue to remain highly sensitive to developments surrounding the Omicron variant while closely monitoring macroeconomic data like the US jobless claims to be released this week," Vinod Nair, head (research) at Geojit Financial Services, said.

After hitting an all-time high in mid-October, benchmark equity indices – Sensex and Nifty – tanked around 9 per cent on the back of a strong selling pressure by Foreign Institutional Investors (FIIs).

Lately, risks of another wave of Covid-19 emanating from the Omicron variant also somewhat dented the broader market sentiment among the investors.

On October 19, the Sensex had hit the record high of 62,245 points, while on Friday it closed at 57,124 points, almost a decline of 9 per cent. Same is the case for the Nifty. It fell around 8 per cent from 17,155 points to 17,003 points.

FIIs have reportedly sold assets worth $2 billion in the Indian market during the past two-and-a-half-month period.

Besides, high valuations in the shares are another concern facing the market, analysts had said.

However, bucking the downtrend, several mid-cap stocks have outperformed the broader market and returned healthy returns to its investors.

Those stocks are Schaeffler India, Anupa Rasayam India, KPIT Technologies, Max Healthcare Institute, Birlasoft, Radico Khaitan, Escorts, Metropolis Health, Minda Industries.

Among them, shares of the Minda Industries rose the highest by nearly 60 per cent since mid-October, data showed.