Mumbai Indian stocks tanked 2% on Monday as the increasing cases of Omicron spooked the investors who feared its spread would start to take a toll on businesses if countries bring back stringent curbs in order to contain the spread of the new coronavirus variant.

Worries over foreign capital flow into Indian markets also kept investors jittery as the Sensex closed at 55,822.01, down 2.09%, and the Nifty ended the day at 16,614.20, declining 2.18%. Intraday, the two indices fell as much as 3.3% and 3.39%, respectively.

From December 10, the Sensex and Nifty have corrected by 5.04% and 5.12%, respectively, while the volatility index VIX shot up 18.05%, indicating that investors are concerned about the market direction in the coming days.

Rising Omicron cases have added to global macro challenges such as inflation and tightening of monetary policies by major central banks and are likely to keep investors on edge in the coming days. As a result, markets may continue to see selling pressure.

“Markets have corrected by ~10% from their peak, driven by consistent FIIs selling, tightening monetary policy by central banks globally and concern over economic recovery due to rising Omicron cases. The overall market breadth remains negative and would require strong positive triggers for changing the current negative trend. Selling pressure is intact at higher levels, and any recovery or bounce is being used by traders to go short on the market. Thus, we maintain our cautious view in the market for the next couple of days,” said brokerage Motilal Oswal in a note on Monday. Market experts see inflation and Omicron concerns playing a major role in market direction going ahead and do not rule out further corrections.