Indian equity benchmarks snapped a two-day winning streak and ended over a percent lower on Friday, dragged by losses across most sectors, especially Energy, Banking and FMCG shares amid uncertainty surrounding the Omicron variant. Markets started trade on a positive note, as traders took some support with the Centre for Monitoring Indian Economy's statement that the index of consumer sentiment for rural India inched up by 0.3% for the week ended November 28 while the index for consumer expectation went up by 1.3%, a much lower jump compared to weeks before the announcement of the repeal of farm laws. Some solace also came after a private survey showed activity in India's dominant services sector continued to grow at a robust pace in November 2021 supported by a strong recovery in domestic demand, but elevated price pressures remained a major concern. The Services Purchasing Managers' Index, compiled by IHS Markit, eased to 58.1 in November from 58.4 in October, but November's rate of growth was the second-best in over a decade and well above the 50-mark separating growth from contraction for a fourth straight month. However, frontline indices quickly reversed their gains and slipped into red terrain in afternoon deals, as traders turned cautious with private report increased its current account deficit (CAD) forecast to 1.9 per cent of GDP at $60 billion for 2021-22 as compared to $45 billion earlier, following the record $23.27 billion trade deficit in November. It said trade deficit -- the difference between a country's imports and exports -- has been rising and remains sticky, driven by weaker exports, surging domestic activity and higher commodity prices. Sentiments also remained dampened after a private report highlighted a curious case of increase in aggregate bank deposits followed by subsequent slump in alternate fortnights, which is quite a contrarian trend. As per the provisional data released by RBI for the fortnight ended 19 November 2021, all scheduled commercial banks' (ASCB) aggregate deposits have slumped by Rs 2.7 lakh crore during the fortnight. This slump in deposits follows an abrupt increase by Rs 3.3 lakh crore during the previous fortnight ended 5 November 2021. Finally, the BSE Sensex fell 764.83 points or 1.31% to 57,696.46 and the CNX Nifty was down by 204.95 points or 1.18% to 17,196.70.

The US markets moved back to the downside during trading on Friday following the rally seen in the previous session. The tech-heavy Nasdaq showed a particularly steep drop, tumbling to its lowest closing level in well over a month. The fall on Wall Street came amid latest news about the Omicron variant of the coronavirus. After the first confirmed omicron case in the U.S. earlier in the week, the new variant has now been detected in at least five states. Traders were also reacting to a closely watched report from the Labor Department showing much weaker than expected U.S. job growth in the month of November. The report said non-farm payroll employment rose by 210,000 jobs in November after surging by an upwardly revised 546,000 jobs in October. Street had expected employment to spike by 550,000 jobs compared to the jump of 531,000 jobs originally reported for the previous month. Despite the much weaker than expected job growth, the unemployment rate slid to 4.2 percent in November from 4.6 percent in October. Street had expected the unemployment rate to edge down to 4.5 percent. With the much bigger than expected decrease, the unemployment rate fell to its lowest level since hitting 3.5 percent in February of 2020. Meanwhile, a separate report from the Institute for Supply Management showed an unexpected acceleration in the pace of growth in U.S. service sector activity in the month of November. The ISM said its services PMI rose to a record high 69.1 in November from 66.7 in October, with a reading above 50 indicating growth in the sector. The increase surprised street, who had expected the index to dip to 65.0.

Crude oil futures pared early gains and settled lower on Friday amid uncertainty about the outlook for energy demand due to fresh restrictions on movements following the spread of the new coronavirus variant Omicron in several countries. Oil prices climbed earlier in the day, riding on the decision of OPEC+ to stick to their existing policy of monthly oil output increases but left room for quick adjustments if the Omicron variant hits demand. Meanwhile, a report from Baker Hughes said the total count of active drilling rigs in the U.S. held steady at 569, the same as last week. Rigs targeting crude oil and natural gas remained unchanged at 467 and 102, respectively. Benchmark crude oil futures for January delivery fell 24 cents, or 0.4 percent to settle at $66.26 a barrel on the New York Mercantile Exchange. Brent crude for February delivery rose 21 cents or 0.3percent to settle at $69.88 a barrel on London's Intercontinental Exchange.

Indian rupee ended weaker against dollar on Friday with fresh dollar demand by banks and importers. Sentiments were dented with private report stating that increasing current account deficit (CAD) forecast to 1.9 per cent of GDP at $60 billion for 2021-22 as compared to $45 billion earlier, following the record $23.27 billion trade deficit in November. It said trade deficit -- the difference between a country's imports and exports -- has been rising and remains sticky, driven by weaker exports, surging domestic activity and higher commodity prices. On the global front, dollar gained on Friday against most major currencies as traders positioned ahead of key U.S. jobs data that could clear the path for an earlier rate hike by the Federal Reserve. Finally, the rupee ended 75.12 (Provisional), weaker by 10 paise from its previous close of 75.02 on Thursday.

The FIIs as per Friday's data were net sellers in equity, while net buyers in debt segment. In equity segment, the gross buying was of Rs 9499.31 crore against gross selling of Rs 9800.84 crore, while in the debt segment, the gross purchase was of Rs 1663.15 crore with gross sales of Rs 993.86 crore. Besides, in the hybrid segment, the gross buying was of Rs 4.04 crore against gross selling of Rs 7.49 crore.

The US markets ended lower on Friday with the Nasdaq leading the declines as investors bet that a strong jobs report would not slow the Federal Reserve's withdrawal of support while they grappled with uncertainty around the Omicron coronavirus variant. Asian markets are trading mixed on Monday as investors remained cautious about the repercussions of the emergence of the Omicron variant of COVID-19. Indian markets snapped a two-day winning run on Friday amid selling pressure in financial, oil & gas and consumer shares. Today, the start of session is likely to be cautious on report of fresh Omicron-based Covid-19 cases emerge in India amid weakness in global markets. Market participants will keep a close eye on the Reserve Bank of India's Monetary Policy Committee (MPC) which will begin its three-day bi-monthly deliberations today. Amid global scare due to new coronavirus variant Omicron, the RBI is likely to maintain status quo in its upcoming monetary policy and wait for a more opportune time to calibrate benchmark interest rate to promote growth without sacrificing the main objective of containing inflation. Some cautiousness will come amid reports about continues foreign fund outflow. The exchange data showed that foreign portfolio investors (FPIs) remained net sellers for Rs 3356.17 crore in the Indian markets. Besides, RBI data showed the country's foreign exchange reserves declined by $2.713 billion to $637.687 billion in the week to November 26. However, some support may come later in the day as Home Minister Amit Shah said the Indian economy is the fastest in the world to come out of the impact of the coronavirus pandemic because of policy decisions taken by the Modi government. Additionally, Defence Minister Rajnath Singh said India has exported defence items worth more than Rs 38,000 crore in the past seven years and the country hopes to become an overall net exporter soon. Traders may take note of report that Union Finance Minister Nirmala Sitharaman said that the government will bring a well consulted cryptocurrency Bill. There will be some buzz in the agriculture industry stocks with the commerce ministry's statement that India's exports of agricultural and processed food products rose by more than 13 per cent during April-November this fiscal to $23.26 billion. Metal stocks will be in focus as ratings agency Crisil said Freight rates for mining, cement, and steel have seen some corrections on-month in November as infrastructure-building activities were subdued. There will be some reaction in NBFCs stocks as India Ratings and Research (Ind-Ra) said tightening of norms may increase non-banking finance companies' (NBFCs) headline non-performing advances (NPA) by around one third. Anand Rathi Wealth IPO will close for subscription today. So far the public issue has been bid for 3.02 times by investors with all retail and Non-institutional Investors oversubscribing their portion of the IPO. Investors will have two more IPOs to invest in this week as Rategain Travel Technologies and Shriram Properties will open for subscription.

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

Nifty Top volumes

• APSEZ has reported cargo volume of 24.74 MMT for November 2021 as compared to 23.77 MMT for the same period last year, registering a growth of 4.08%. 
• Hero MotoCorp along with Gilera Motors Argentina has expanded operations and inaugurated a flagship dealership in Argentina. 
• L&T and Kemroc have entered into a distribution agreement that will facilitate Kemroc products to be distributed and promoted in the Indian market by L&T.
• ONGC has signed a MoU with Solar Energy Corporation of India to scale up its clean energy projects.

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