NEW DELHI: Weakness continued on Dalal Street as benchmark indices drifted lower in early trade dragged by selling in bank, auto and financial services stocks. Rising Omicron cases also hurt the sentiments.

There are three major headwinds to the market now: the fast spreading Omicron variant, relentless selling by FIIs and hawkish central banks. The countervailing tailwinds are the bullish DIIs and retail investors and the smart rebound in growth and corporate earnings, said analysts.
“The widening trade deficit and FII outflows have depreciated the INR, thereby improving the prospects for gold and IT companies. IT is well positioned to outperform the market,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

How are bluechips doing
After opening in the red, benchmark indices fell further lower. At 10.47 am, BSE flagship Sensex was down 728 points or 1.26 per cent to 57,173. NSE benchmark Nifty declined 219 points or 1.27 per cent to 17,029.

Titan was the top loser in the pack, down 3.28 per cent. Tata Motors, Maruti Suzuki, Asian Paints, Eicher Motors, IndusInd Bank, M&M, HUL and Cipla were other stocks that traded in the red.
FACTORS DRIVING MARKETS
Yields, dollar fall: The dollar index was trading at 95.999, off nearly 1 per cent since Wednesday's high immediately after the Federal Reserve announced it would accelerate tapering of its emergency bond buying programme and prepare to raise rates more quickly next year. The yield on benchmark 10-year Treasury notes was at 1.4275 per cent, the lower end of their recent range.
BoE hikes rates: The Bank of England surprised markets by becoming the first major global central bank to raise interest rates - hiking by 0.15 percentage points to 0.25 per cent. The euro firmed after the European Central Bank took another small step to roll back crisis-era stimulus.

Third wave?: The pandemic is showing signs of beginning a third wave as the number of infections are rising. The UK and South Korea are reporting a record number of fresh cases, while the US has also seen a sharp increase in infections. Traders fear these may lead to another round of restrictions.

Broader markets
Broader market indices were trading lower, underperforming their headline peers in morning trade. Nifty Smallcap was down 1.40 per cent while Nifty Midcap fell 1.22 per cent. Broadest index on NSE, Nifty 500, was down 0.77 per cent.
Zenstar Tech, Birlasoft, Edelweiss Financial, Sona Comstar, Mindtree and Mphasis were gainers from the space while Zee Entertainment, BHEL, Bharat Electronics, Indiabulls Houing Finance, Tanla Platforms and TV18 Broadcast were under selling pressure.
MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.2 per cent. It is heading for a weekly decline of 1.7 per cent, and at 621.93 is only just above the year low of 615.99 set last week.

Chinese stocks, particularly tech names, have been a major drag, with the Hong Kong benchmark touching its lowest level since September 2020 on Thursday, and falling 0.56 per cent on Friday.