Contrary to the weak sentiment in Europe and the US, India’s stock markets rebounded smartly on Thursday. Domestic institutional investors and retail and high net worth traders led the rally, brokers said.

Analysts told BusinessLine that markets are not worried about another Covid wave or the Omicron strain, but will be focussed on the government’s response to them and its economy related decisions.

Sensex gained 776 points, or 1.35 per cent, to close at 58,461. The broader Nifty index rose 234 points, or 1.37 per cent, to end the day at 17,401.

Foreign portfolio investors (FPIs) remained net sellers for ₹909 crore in the cash segment, per provisional figures. But DIIs net purchased stocks worth ₹1,372 crore. In just two trading days of December so far, the DIIs bought in for ₹4,839 crore, even as FPIs for ₹3,675 crore in the cash segment. In the futures, FPIs have been net purchasers the past two days of contracts worth ₹1,083 crore.

“We expect the uncertainty (in markets) on both fronts (inflation/monetary policy and Omicron) to reduce, if not resolve, this month,” Kotak Institutional Equities said in its quant report.

The global crude oil market will also be closely watched the next couple of days.