Benchmark indices on Monday sank to their lowest level in almost four months, wiping out investor wealth by Rs 6.80 lakh crore amid fears that rising Omicron-related Covid infections and stubbornly high inflation could derail global economic growth.

The 30-share Sensex plunged 1189.73 points to close at 55822.01 after nosediving to 55132.68 — a fall of over 1879 points. The broader Nifty crashed 371 points or 2.18 per cent to 16614.20.

In India, market players, including retail investors, have turned hesitant fearing a longer bout of correction even as an end to the easy money policy by global central banks could affect portfolio inflows.

Analysts said given the bearish conditions, stocks were likely to remain under pressure and show volatility in the near term till apprehensions over the new Covid-19 variant blow away.

According to a note by Kotak Mutual Fund, Omicron is the most important concern for the markets. “Fortunately, all the data received so far shows that this is a mild variant and hopefully this will not result in disruption and our battle continues to remain with the delta variant.’’

The fund house said prices were also a damper. Though inflation remains within the RBI’s comfort zone, if prices continue to rise overseas central bankers will have to raise interest rates and take away liquidity. Both of those steps will have a direct impact on equity valuations.

“As long as headline inflation and Omicron risks remain elevated, investors need to remain nimble footed as the economic recovery will probably be in a zig zag mode. The ongoing pessimism indicates that the recent dramatic crash is nowhere near over. The Nifty’s biggest support is seen only at 15,871-16,000 zone with an inter week-perspective,’’ Prashant Tapse, vice-president (research) at Mehta Equities said.

Manoj Dalmia, founder and director-Proficient Equities, said the Sensex may correct till 52000-53000 range which is seen as a support area.

Rupee rises

The rupee notched up gains for a third straight session on Monday, rising by 16 paise to settle at 75.x90 (provisional) against the dollar as easing crude oil prices revived an otherwise lacklustre sentiment.

Massive sell-offs in domestic equities, sustained foreign fund outflows and concerns around Omicron variant were a host of factors restricting rupee gains, traders said.