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Below is the Daily Market Commentary 29th November 2021 By Mr. Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd

Domestic market, after opening positive witness sharp selloff in its initial tick, following its Asian peers and amidst uncertainties of new Covid variant. However, indices soon recovered from lower levels and traded in a narrow range throughout the day, to finally settle in marginal green. Broader market, however, underperformed and closed in negative territory with nifty midcap 100 down 1.4% and nifty small cap 100 down 2.6%. Among sectors except for IT and consumer durables, all other sectors ended lower with media, pharma, realty, oil & gas, and PSU bank down 1-2%. Telecom sector was in limelight as all telecom majors reported a rate hike.

Globally, markets remained mixed though they it did recoup some of its losses of previous week as investors assessed the severity of the Omicron coronavirus variant and its impact on world economy. Oil prices bounced back after sharp plunge last week on speculation that OPEC and its allies might pause their program of incremental output increases.

After touching a record high on 18th Oct'21, the Nifty has corrected 8% so far, led by various global factors (Fed's taper announcement, rising bond yields, higher crude oil prices, and strengthening of the US Dollar Index) and detection of a new COVID-19 variant - Omicron - in South Africa. A big fundraise in the primary market also put some pressure on the secondary market. Sentiments were battered globally, with global markets correcting by 2-3%, bond yields easing, and Brent Crude prices plunging by 11%. India's VIX rallied 25% to 20.8. Since these are early days for the new variant, limited information regarding its transmission and impact is available. We expect the Centre/ state governments to remain proactive, given their experience from the second COVID wave in Apr-May’21, and guidelines to evolve as the trajectory of the new variant becomes clearer. We expect the market to witness elevated volatility in the near term. However, valuations after the pullback, are relatively reasonable now at 23.3x/19.5x FY22E/FY23E Nifty EPS. Hence we would advise investors to buy into this correction.

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