New Delhi, Dec 6 The Nifty ended its six-month winning streak in November 2021, ending 4 per cent, or 688 points, lower at 16,983, according to a report by Motilal Oswal Financial Services.
November 2021 was characterized by elevated volatility, with the benchmark oscillating in a wide range (1,400 points) and pulling back 8 per cent from record highs of October.
Much of the market anxiety can be attributed to global factors (Fed's taper announcement, rising bond yields, higher crude oil prices, and strengthening of the US dollar Index).
A big fundraise in the primary market also put some pressure on the secondary market. Sentiments were battered across global equity markets on November 26 with the detection of a new Covid-19 variant – Omicron – in South Africa. November saw the highest inflows by DIIs since March 2020 at $3.6 b. FIIs saw outflows for the second consecutive month at $0.8b.
Covid-19 cases continue to remain under control so far, despite the festive season. The decline in active cases has led to an increase in economic activity and mobility.
While the new variant – Omicron – adds to the uncertainty, we expect further clarity to emerge in the next few weeks as additional data comes out. This will mar sentiment in travel, tourism, hospitality, and retail, which has seen significant outperformance in the last few months on the back of opening up of economy, a good festive season, and a broad-based demand recovery.
Even sectors/stocks exposed to markets with rising Covid-19 cases/greater prevalence of the Omicron variant may underperform. We expect sector rotation in the market to continue and defensives like Pharma, IT, and Consumer to make a comeback till sentiments improve.
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