Auto, metals lead continued recovery in Indian shares amid Omicron fears

Indian shares extended gains on Wednesday with auto and metal companies leading the recovery as investors bought recent market dips, though a global surge in Omicron COVID-19 cases kept investor sentiment in check.

The NSE Nifty 50 index rose 0.4% to 16,833 by 0456 GMT and the benchmark S&P BSE Sensex gained 0.3% to 56,485.04. Both the indexes were down more than 9% from a lifetime high hit in October.

Wednesday's gains follow a near 1% rise in India's benchmark indexes in the previous session after tumbling as much as 3% on Monday.

"Most of the fears and reaction to negative vibes look to be slightly overdone. Which is why we have seen a recovery rally in the past two sessions," said Anand James, chief market strategist at Geojit Financial Services.

"Markets have been pricing in most of the actions like U.S. Federal Reserve rate action apart from Omicron. Even though the COVID scare is still there, we are much better prepared and not in a blind spot anymore," James said.

The Nifty auto index was up 1.5%, while the metals index gained 1.3%. Both the indexes had fallen 2.6% and 3.8% in Monday's broader sell-off.

Tata Motors was the top Nifty 50 gainer, rising 2.8%, while Power Grid Corp was the top drag, falling 2.3%.

Footwear retailer Metro Brands made its debut in Mumbai market at a discount of 13% compared with its initial public offering price of 500 rupees.

Meanwhile, India told state governments on Tuesday to be proactive and on the lookout for surges of the Omicron coronavirus variant after cases nearly doubled within a week across a dozen states.

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