Dalal Street unnerved by Omicorn, here's how experts see the market behaving in near term

#Market Edge, new coronavirus strain Omicron

Stock market news

The new coronavirus strain Omicron has spooked investors and traders around the world as concerns resurface about economic recovery, with countries bringing back restrictions to curb the spread of the variant that is possibly more infectious.

The Nifty50 plunged 738.35 points, or 4.16 percent, to 17,026.45 in the week gone by, dipping to it lowest since August 30. The BSE Sensex was down 2,528.86 points or 4.24 percent at 57,107.15.

Nervousness is expected to continue during the week as well, say experts, with the focus on severity of the new strain, monthly auto sales numbers, Q2 GDP data and FII flow.

Here’s how market experts foresee the equity markets in the days ahead:

Likhita Chepa, senior research analyst, CapitalVia Global Research

The discovery of the new Covid variant has surely triggered caution among investors globally, as we have witnessed sell-off pressure across markets and sectors.

There has been a consistent increase in the volatility index in the last few sessions, which is mirroring the sentiments of investors.

COVID-sensitive sectors like banking, realty and auto have started feeling the heat as we have witnessed huge selling pressure in the stocks from these sectors.

Stocks belonging to the unlock theme, which gained momentum in recent times, seem to be under pressure with increasing chances of travel restrictions across the globe.

Sectors like tourism and hospitality were severely hit due to the pandemic and had not yet recovered fully. Travel restrictions would have an adverse effect on firms from these sectors.

Investors appear to be booking profits in high-beta sectors and shifting their portfolio to defensive sectors like FMCG and IT.

We expect the market to maintain its corrective phase for the next few trading sessions and therefore making fresh longs is not advisable.

The Nifty has strong support at around 16,000, therefore, investors can pick stocks around this level.

Deepak Jasani, Head, Retail Research, HDFC Securities

Global markets suffered their worst day in more than a year on November 26 amid growing concerns over Omicron. Some market participants feel it’s not worth starting a panic crash over this mutation.

Having said that, the steep fall on November 26 suggests that markets are susceptible to sharp falls even as the valuations across the globe are not cheap, commodity prices keep acting strange, supply chain issues are yet to be sorted fully and geopolitical issues keep cropping up.

Even if the latest threat turns out to be overblown, the upside could still be limited and markets could again react negatively to some other emerging development. Sell into rallies could be witnessed for some weeks to come.

Siddhartha Khemka, Head-Retail Research, at Motilal Oswal Financial Services

Going ahead, the market is likely to continue under pressure till clarity emerges over how dangerous this new COVID-19 variant can be. The market is already watchful of the timing of the Fed’s interest rate hike.

The emergence of the highly mutated COVID-19 variant, lockdown-like restrictions in some European countries and the EU announcing a temporary ban of flights from southern Africa, the market sentiment has taken a hit.

In such a scenario, it is wise to grab the opportunity and invest in stocks that are backed by strong fundamentals and sound management.

Mohit Nigam, Head-PMS, Hem Securities

The new coronavirus strain has been categorised as the variant of concern by WHO but its complete impact needs to be seen.

The Delta variant triggered a second wave in India in April and May but markets stood strong during that time and gained over the next few months.

Markets have witnessed its impact in the form of about 9 percent correction from the highs but taking strong support at 16,800 levels.

Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas

In terms of the Fibonacci retracement, the Nifty has retraced 50 percent of the July–October rally. There is potential for a recovery from this support zone as long as the index holds on to the 17,000 on a closing basis.

A breach of 17,000 on a closing basis may see the Nifty slide towards the 61.8 percent retracement mark, which is near 16,700.

Disclaimer: The views and investment tips expressed by experts on moneycontrol.com are their own, and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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