Indian equity benchmarks wiped off morning gains to end sharply lower on Monday, amid concerns over rising cases of Omicron virus in Europe and surging inflation across the world. The benchmarks staged a gap up opening, as traders took encouragement with the government data showing that India's industrial production rose 3.2 per cent in October 2021. As per the Index of Industrial Production (IIP) data by the National Statistical Office (NSO), the manufacturing sector's output grew 2 per cent in October. Buying further crept in as the finance ministry said India's economic recovery is expected to strengthen in the remaining quarters of the current fiscal year with the investment cycle kicking off, and projected 7% annual growth until the end of the decade. Adding to the optimism, Union minister Amit Shah said policies were framed after hours of brainstorming and studying all the aspects in order to bring back pre-pandemic levels of economic growth. He also said the policies which became hurdles in bringing industry, affected Make In India or obstructed 'Atmanirbhar Bharat' were changed during the coronavirus period. However, key indices succumbed to selling pressure in second half of trading session on account of profit booking. Domestic markets impacted as Reserve Bank of India (RBI) Governor Shaktikanta Das has cautioned depositors to be careful while chasing high returns as it comes with greater risk. Observing that depositors themselves also need to be very discerning, he said it is important to keep in mind that higher returns or higher interest rates are usually associated with higher risks. Traders also showed cautiousness with the reports that the government is unlikely to announce capital infusion for public sector banks (PSBs) in the upcoming Budget. Traders remained on sidelines ahead of the consumer price index (CPI) data to be released later in the day. Finally, the BSE Sensex fell 503.25 points or 0.86% to 58,283.42 and the CNX Nifty was down by 143.05 points or 0.82% to 17,368.25.

The US markets settled lower on Monday as traders cashed in on some of the strength seen in the markets last week. Further, weakness also prevailed in the markets as investors remained cautious about how the omicron variant will affect the economy and what the Federal Reserve will announce Wednesday. The Fed is expected to discuss accelerating the pace of tapering its asset purchase program, with reports suggesting the central bank could double the rate to $30 billion per month. Meanwhile, the new variant has pushed some government officials to reinstate health restrictions to slow the spread. As of Sunday, the US was approaching 800,000 coronavirus-related deaths. UK Prime Minister Boris Johnson confirmed that at least one patient infected with the omicron variant has died in the country. On the sectoral front, oil service stocks saw substantial weakness on the day, resulting in a 4.6 percent nosedive by the Philadelphia Oil Service Index. The sell-off by oil service stocks came amid a decrease by the price of crude oil, as crude for January delivery fell $0.38 to $71.29 a barrel. Considerable weakness was also visible among airline stocks, with the NYSE Arca Airline Index tumbling by 3.2 percent. Semiconductor stocks also showed a significant move to the downside, dragging the Philadelphia Semiconductor Index down by 2.6 percent. Banking and computer hardware stocks also moved notably lower, while strength emerged among biotechnology, pharmaceutical and utilities stocks.

Crude oil futures ended lower on Monday on account of concerns about the outlook for energy demand amid worries about the impact of the Omicron variant of the coronavirus on global economic recovery. The Omicron coronavirus variant has been detected in more than 60 countries so far. Oxford University said vaccines showed to induce lower levels of protection against Omicron. Meanwhile, traders also looked ahead to the Federal Reserve's monetary policy announcement, due on Wednesday. The Bank of Japan, the European Central Bank and the Bank of England will also announce their respective monetary policies this week. Benchmark crude oil futures for January delivery fell $0.38 or about 0.5 percent to settle at $71.29 a barrel on the New York Mercantile Exchange. Brent crude for February delivery declined $0.73 or 1 percent to settle at $74.42 a barrel on London's Intercontinental Exchange.

Indian rupee ended flat on Monday due to mild dollar demand from banks and importers. Traders took some support as India's industrial production rose 3.2 per cent in October 2021. As per the Index of Industrial Production (IIP) data by the National Statistical Office (NSO), the manufacturing sector's output grew 2 per cent in October. However, upside remained capped as Reserve Bank of India (RBI) Governor Shaktikanta Das has cautioned depositors to be careful while chasing high returns as it comes with greater risk. Observing that depositors themselves also need to be very discerning, he said it is important to keep in mind that higher returns or higher interest rates are usually associated with higher risks. On the global front, dollar edged higher on Monday ahead of a slew of central bank meetings this week including the U.S. Federal Reserve, with investors eyeing how quickly it will unwind bond-buying and looking for clues on when it will start to raise rates in 2022. Finally, the rupee ended unchanged (Provisional) from its previous close of 75.78 on Friday.

The FIIs as per Monday's data were net sellers in both equity and debt segments. In equity segment, the gross buying was of Rs 5628.86 crore against gross selling of Rs 6552.22 crore, while in the debt segment, the gross purchase was of Rs 127.86 crore with gross sales of Rs 893.66 crore. Besides, in the hybrid segment, the gross buying was of Rs 25.31 crore against gross selling of Rs 24.23 crore.

The US markets ended lower on Monday as traders cashed in on some of the strength seen in the markets last week. Asian markets are trading mostly in red on Tuesday following Wall Street's pullback from record highs. Indian markets closed sharply lower Monday, pulled by financial and FMCG stocks. Today, markets are likely to start session in red following weakness in global markets. The World Health Organisation (WHO) warned that Omicron, which now has been reported in more than 60 countries, poses a very high global risk, with some evidence that it evades vaccine protection. The state health department said Maharashtra on Monday reported two new patients infected with the new Omicron variant of SARS-CoV-2. Traders will be concerned as the data released by the Ministry of Statistics and Programme Implementation (MoSPI) showed that the country's retail inflation rate, which is measured by the Consumer Price Index (CPI), rose to 4.91 percent during the month of November 2021. The inflation has increased sequentially, as it was recorded at 4.48 percent in October 2021. Year-on-year, however, a dip has been registered as the rate of inflation in November 2020 was 6.93 percent. The uptick on sequential basis was led by an increase in food prices, particularly vegetables. Now, investors will be eyeing the WPI data to be out later in the day. Also, there will be some cautiousness as a private report showed that foreign direct investment (FDI) into India in the July-September quarter of 2021-22 fell a sharp 42% on year at $13.5 billion from $23.4 billion a year ago. However, some respite may come later in the day as estimates by Export-import Bank of India showed that India's merchandise exports are expected to grow by 51 per cent to about $303.98 billion in nine months ending December 2021 over the same period in 2020. Traders may take note of report that NITI Aayog CEO Amitabh Kant said undeterred by the repeal of farm laws, the government will continue to push for greater reforms across sectors. Meanwhile, Finance Minister Nirmala Sitharaman has said the cabinet committee on privatisation is yet to take a decision with regard to divesting two public sector banks. Banking stocks will be in focus as United Forum of Bank Unions alleged that public sector banks have lost nearly Rs 2.85 lakh crore on account of loan dues of 13 corporates even as the banks are used to bail out ailing financial institutions such as Yes Bank and IL&FS. Data Patterns (India) IPO will open for subscription today. The public issue compromises a fresh issue of Rs 240 crore and an offer for sale of 59.52 lakh shares in the price band of Rs 555 - 585 per share. Shares of Anand Rathi Wealth Limited, the wealth management arm of Anand Rathi Financial Services, will be listed on NSE and BSE today.

                                Support and Resistance: NSE (Nifty) and BSE (Sensex)

Nifty Top volumes

• UltraTech Cement has been declared as the preferred bidder after participating in the e-auction of Ravur Limestone Block conducted by the Government of Karnataka. 
• Tata Motors is planning to hike prices of its entire passenger vehicle range from January in order to offset the impact of rising input costs. 
• ONGC is seeking a minimum price of $3.5-4 for the natural gas it plans to produce from coal seams in Jharkhand and a field in Tripura. 
• Wipro has launched Wipro VisionEDGE, a dynamic digital signage and omni channel advertising solution, to expand its sports, retail, transportation, and entertainment offerings.