Benchmark stock market indices opened sharply lower on Monday due to rising concerns over the rapid surge of Omicron Covid-19 cases around the world.

Investors around the world are nervous that the surge will trigger a fresh wave of global infections, leading to fresh restrictions that could hurt economic recovery.

The S&P BSE Sensex opened sharply lower and was down over 1 per cent after opening. At 10:10 am, it was down 2 per cent, losing as much as 1,141 points. The fear on D-Street is evident as the Sensex fell below 56,000 after a prolonged period.

Read | Sensex plunges nearly 900 points: What triggered Friday’s bloodbath on D-Street?

The NSE Nifty 50 also collapsed in early trade, falling 394 points or down over 2.3 per cent. This is one of the biggest drops in the domestic stock markets this year. Most stocks on the 30-scrip Sensex were in the red, while all Nifty sectoral indices had slipped into negative territory. Metal, bank, realty, auto and financial services stocks were the worst performers in early.

As cases are rising globally and in India, there are chances that markets will see increased volatility.

OMICRON THREAT

Many countries around the globe are witnessing a sharp spike in new Covid-19 cases involving the Omicron variant, which is believed to be much more transmissible than the previous Covid-19 variants. Several reports also indicate that vaccines are less effective against the new variant.

The World Health Organisation (WHO) has warned countries around the globe to stay vigilant as it could emerge as a massive threat if ignored. Top medical experts have also expressed concern over the new variant as it continues to spread rapidly across the globe. Even Indian authorities are worried, as over 150 cases have already been reported in the country.

This has made domestic investors nervous, given the possibility of fresh restrictions that could severely hurt businesses and market sentiments.

Another factor that has dented investor confidence is the possibility of a sharp spike in inflation over the next few months. The hawkish stance taken by central banks around the globe has also affected market momentum.