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Developments around the new Omicron variant of coronavirus, global market trends and foreign institutional investors' movement will be the driving force in moving the domestic equity market this week, according to analysts. 

"Global markets, Omicron variant, dollar index and FIIs' behaviour will be key factors to drive the market this week," Santosh Meena, the head of research at Swastika Investmart Ltd., was quoted as saying by news agency PTI.

One major event last week was US Federal Reserve's announcement that it will end bond-buying from March, and it also signalled starting rate hike cycle thereafter.

Observing that the overall investor sentiment remained downbeat throughout, Meena said: “The selling can be attributed to hawkish Fed, rising worries of Omicron, rupee weakness, and most importantly relentless selling by FIIs."

During the last week, the BSE benchmark tumbled 1,774.93 points or 3.01%.

The Sensex plummeted 889 points on Friday in line with a selloff in global markets amid hawkish central banks and rising Omicron cases.

Ajit Mishra, VP research of Religare Broking, echoed Meena's thoughts. 

"In absence of any major event, global cues will dictate our market trend. Participants are keeping a close watch on the Covid situation due to the new variant and related updates will continue to induce volatility in days to come," he said. 

Siddhartha Khemka, the head of retail research, broking and distribution, Motilal Oswal Financial Services Ltd., said: “Negative global cues, continued FII selling, absence of any positive trigger and increasing cases of Omicron are likely to continue putting pressure on the market."

Yesha Shah, head of equity research at Samco Securities said: "In the absence of major domestic events, market will seek indications from global indices and macroeconomic data, such as the US GDP growth rate, to decide its movement. As global macros are expected to dominate, investors should keep an eye on FII activity to assess trends and stick to a stock-centric investing strategy in the midst of range-bound index moves."

With inputs from agencies. 

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