Indian markets witnessed a strong rebound on Tuesday a day after investors were bit by a bruising sell-off on Monday triggered by fears of a fast-spreading Omicron variant of the covid-19 virus.
Sensex closed the day at 56,319 points, up 0.89%, while the Nifty closed up by 0.94% at 16,770.85.
Intraday, the two indices had hit a high of 56,900.74 and 16,936.40 respectively, but pared those gains later in the day.
Buying in Metal and IT counters mainly helped markets to maintain gains, said Mohit Nigam, Head - PMS, Hem Securities.
The Indian markets followed cues elsewhere in the Asian region where other indices too closed the day higher shrugging off the sell-off seen in the previous session. Japan’s Nikkei closed 2.08% higher on Tuesday, while Hang Seng and Shanghai Composite closed with gains of 1% and 0.88%.
“Asian shares were mostly higher on Tuesday after a worldwide slump for financial markets spurred by worries about how badly the omicron variant, inflation and other forces will hit the world economy. European shares rebounded on Tuesday after a brutal selloff in the previous session, with a jump in commodity stocks offsetting concerns about the Omicron coronavirus variant,” said Deepak Jasani, head of retail research at HDFC Securities.
The broader Euro STOXX 600 rose as much as 1.1%, with Germany DAX's adding 1% and London's FTSE climbing 0.9%.
“The positive takeaway from today's trading session was that Nifty rebounded sharply higher as the US dollar dipped, U.S Treasury yields stabilized, and most importantly, despite Omicron covid variant fears continuing to loom,” said Prashant Tapse, Vice President (Research) at Mehta Equities Ltd
“In a few weeks we’ve gone from caution, to skepticism —— to panic and back to optimism. Digging deeper, emotions are likely to be the name of the game, and this should continue to swing wildly and quickly,” he added.
Yet while the widespread selling of global shares appeared to have eased on Tuesday, analysts still voiced caution about risks from Omicron.
"COVID remains a threat to the global economy. Initial evidence suggests the Omicron variant is more transmissible but results in less severe illness compared to previous variants," economists at CBA wrote in a note.
Reuters contributed to the story