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Below is the Daily Market Commentary 20th December 2021 By Mr. Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services

Indian markets plunged sharply today, tracking the weak global cues. Nifty at one point was down over 3%, its biggest fall in 8 months. It managed to close with a fall of  ~371 points (-2.1%) at 16,614 levels after some recovery seen in last hour of trade. Broader market witnessed sharper selling pressure with Nifty midcap and smallcap down ~4% each. All the sectoral indices ended in red with Media, PSU bank and Realty being top losers – down more than 4% each. Volatility index, India VIX was up 16% at 19 levels.

Global markets were deep in red as investors worries over surging omicron cases with tighter restrictions in certain European counties, potentially damaging the region’s economic recovery. The Netherlands went into a full lockdown on Sunday, until at least Jan. 14., providing a lead to several other European governments. Further, Goldman Sachs trimmed its US Q1 CY2022 DP forecast to 2% from 3% earlier, after U.S. Senator Joe Manchin withdrew his support to U.S. President Joe Biden's $1.75 trillion domestic investment bill, thus dampening the overall sentiments.

Markets have corrected by ~10% from their peak driven by consistent FIIs selling, tightening monetary policy by central banks globally and concern over economic recovery due to rising omicron cases. The overall market breadth remains negative and would require strong positive triggers for changing the current negative trend. Selling pressure is intact at higher levels and any recovery  or bounce is being used by traders to go short on the market. Thus, we maintain our cautious view in the market for next couple of days.

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