(Bloomberg) — India’s key equity index is poised to enter a correction as concern about risks from the rapid spread of the omicron coronavirus variant prompted selling of equities ahead of year-end holidays.
Tata Steel Ltd. was the biggest drag on the NSE Nifty 50 Index which retreated 2.3%, as of 10:16 a.m. in Mumbai. The gauge is on course to end the day at its lowest level in more than three months after tumbling more than 10% intraday from a record high close on October 18.
“Markets are under tremendous pressure, a further 5%-6% decline is possible for the benchmark,” said Vishal Wagh, head of research at Bonanza Portfolio Ltd.
Stocks tumbled across the region as concerns that a return of stricter curbs to control the spread of the new variant may hurt nascent economic recoveries weighed on investors’ sentiments.
India’s benchmark Sensex rose more than 20% in the first 10 months of this year, aided by the central bank’s efforts to pump funds into the economy and steady buying by millions of first-time investors. The measure’s gain of almost 120% from a March 2020 low — when stocks plunged worldwide as the coronavirus spread — is the most among countries with stock markets worth at least $1 trillion.
In recent weeks, brokerages including Goldman Sachs Group Inc. and Nomura Holdings Inc. have lowered their outlook for Indian equities, flagging pricey valuations. The Sensex trades at 21 times blended forward 12-month profit, compared with 12.3 for the MSCI Emerging Markets Index. Foreign investors have sold about $1.1 billion dollars in local shares this month through Dec. 16.
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