The coronavirus came back to spook investors with the detection of two cases of the Omicron variant in the country that led to the benchmark Sensex crashing almost 765 points on Friday.

The markets were mostly buoyant for the better part of this week as investors took heart from the 8.4 per cent growth in India’s real GDP in the second quarter, a surge in GST collections during November and a benign fiscal deficit during the April-October period. The players ignored headwinds such as a faster end to the bond buying programme by the US Federal Reserve.

The mood soured on Friday as India reported two cases of the Omicron variant, stoking fears of fresh restrictions by states.

Reflecting the wary sentiment, the 30-share Sensex opened in the green at 58555.58 and hit the day’s high of 58757.09. However, investors used the opportunity to offload their positions resulting in the gauge settling at 57696.46, a drop of 764.83 points or 1.31 per cent. Similarly, the broader Nifty fell 204.95 points or 1.18 per cent to end at 17196.70.

Heavyweights such as Reliance Industries, the HDFC twins, Bharti Airtel and Kotak Mahindra Bank saw losses of up to 3.05 per cent. Only four stocks in the Sensex pack ended in the green with the shares of Larsen & Toubro leading the list of gainers with a rise of 0.72 per cent.

Analysts said the markets would continue to be on the edge as they await more data on the new variant.

The key event next week is the three-day meeting of the monetary policy committee (MPC) of the RBI from Monday. The panel is widely expected to hold rates, maintain its accommodative stance and continue mopping excess liquidity from the system.

However, the spotlight will be on the guidance provided by the apex bank.

“Concerns over the new Omicron variant, rising global inflation and the Fed’s recent remarks on early tapering continued to drive volatility in the markets on Friday,” Vinod Nair, head of research at Geojit Financial Services, said.

“The much-awaited decision of the MPC will be on whether they would wait for another session and evaluate the impact of Omicron to decide on a reverse repo rate hike,’’ he said.

One of the major factors that has contributed to the volatility in recent times is the selling by foreign portfolio investors (FPIs). Provisional data showed they were net sellers of Rs 3,356 crore in Friday's trade. They have sold stocks worth Rs 19,495 crore in October and November.

However, at the same time, retail investors and domestic institutional investors have continued to maintain their faith in stocks, thereby preventing a major correction.