How do you see the stock market trading on Monday 29-Nov after the sharp correction on Friday last week?

On Friday, it was all about the B.1.1.529 variant or the Omnicron variant of the COVID virus which has its origins in the Southern part of Africa. It showed up as live cases in a number of countries, setting off panic in the equity and oil markets. The Dow fell sharply by over 900 points while oil prices fell by nearly 13% in the WTI market on demand worries.

Friday was not just about being ruled by the bears as the A/D ratio or the advance decline ratio dipped to 4:46 levels. At the same time, the VIX spiked by 25% in a single day to close near the 21 levels. In other words, VIX has spiked by 50% spike in just 3 days showing a high degree of fear and caution in the markets about its likely implications.

Foreign institutional investors were net sellers on Friday worth Rs.5,786 crore in equities while domestic funds were buyers to the tune of Rs.2,294 crore. In the month of November so far, the FPIs have sold over Rs.25,800 crore in secondary market but infused Rs.27,200 crore into IPO markets, and that has kept the overall FPI figure looking pretty good.

No market was virtually spared on Friday with Dow losing 2.6%, NASDAQ losing 2.3%, the FTSE down 3.6%, DAX falling by 4.15% and the CAC lower by 4.75%. Even the SGX Nifty is down 100 bps in early trades on Monday after the sharp crack on Friday. For Monday, it looks like the lag effect of the Friday crash could last for some more time.