Stock market investors should be cautious due to Omicron, says Market Analyst Nikhil Singh Sumal

Over the last several trading sessions, domestic stock markets have seen a jump in volatility as investors remain concerned about the overall impact of the Omicron form of coronavirus.

Following concerns that a new coronavirus variety is spreading swiftly across countries, both the S&P BSE Sensex and the NSE Nifty 50 had two major collapses last week. As a result of scientists classifying the new variety as highly transmissible, some governments have imposed new limitations.

Market experts are worried that hasty decisions taken by countries to prevent the spread of the new Covid variant could ultimately end up hurting global economic recovery and markets. This, in turn, could have a damaging effect on the Indian stock markets as well.

The new COVID variant Omicron has created quite a stir in the world owing to its mutation and spike protein abilities. Though WHO has said that it is researching on the latest variant but the market has already started showing the trends of slowing down as the buyers have started pulling out their hands to avoid a market crash.

Nikhil Singh Sumal, who is an ace Stock Market Analyst said- "The market analysis can be quite complex in circumstances like these, Foreign Investors are pulling out their money, and at the same time domestic investors have started flowing in. Therefore you cannot tell what will be the outcome of the market. Because the market trends can weigh any side. At this time the market is highly overvalued, it requires correction but there is nothing major to worry about . If the market goes through the stage of correction as well then just invest 10% more of your investment and play it safe. And if market crashes then up your capital by atleast 50%. 

Speaking about the latest stir of Omicron and market trends, Nikhil said- " Though you can see a bull run trend where the market seems to be rising, but be cautious as the crude oil prices and Omicron both can negatively affect the market. And NIFTY can hit as low as 16500 points as well. Expect a correction between 8-15%.

Discovery of the omicron variant has led to a downfall in global markets, and Asian markets seem to have followed the trend as well. 

Though Indian Markets have been performing well but The recent addition of Omicron cases from Karnataka may lead to a negative impact. The reason many investors find themselves in a dilemma is because the vaccine efficiency against this variant is yet to be studied and could take anywhere between 1-2 weeks.

 

This can lead to a pause in Economic Normality as well. The sectors that are expected to perform well in these unprecedented times are IT, Pharma, Telecom and FMCG.  Nikhil towards the end of the conversation said that Short Term Investors should look for profit booking, While Long Term Investors should look out for correction rates more often.